Do I earn enough to have to pay tax?

Why must I pay tax, I don’t earn enough! Will I get a penalty if I don’t disclose all my income to SARS? These questions are common and usually include other sources of income such as interest from a bank account. If these earnings don’t extend above the tax threshold then why disclose them and pay tax? Unfortunately while you may not have to pay tax on the income, you will certainly have to disclose it to SARS. Let’s assume you earn a salary of R200 000 a year and have R12 500 in the bank. This money earns you about R500 interest per year. You are one of those taxpayers that cannot afford to keep a lot of money in the bank as family expenses are high. That R500 you earned in bank interest would indeed be exempt from tax as it is less than the R22 800 threshold that most individuals are allowed for interest. However you need to disclose this on your tax return. SARS will then determine whether the amount qualifies for exemption or not. Remember to disclose ALL income earned, regardless of whether you think it is too little. Look out for those IT3a/b/c’s and declare the interest, even the tiniest amounts. You don’t want a SARS audit, nor penalties for non-compliance!

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54 Responses to Do I earn enough to have to pay tax?

  1. Eugene says:

    Hey Taxtim, do I have to pay taxes if I have a blog and it starts making money. If yes when do I have to start paying, at what level of income?

    • Tim says:

      Hi Eugene,

      You will always need to pay tax if you earn taxable income of over R63 556 regardless of the source of the income if you earn this in your individual capacity. If however you set up a company and the company earns the income then different rules apply depending on the level of income earned. For individuals, tax years are from March to February and if it is expected you are going to earn more than the tax threshold above you will need to register as a provisional taxpayer and follow that process.

      I know that is a simple answer, but I am more than happy to privately discuss your individual circumstances.

      Visit http://www.taxtim.com to download the IT77, taxpayer registration form.

      Regards,
      Tim

  2. Paula Finnie says:

    Please can you help us. My husband and I are permanent residents in SA and work as full-time pastors. We have a bond in SA. We are funded from overseas where we are tax payers. One of us also has a part-time job in SA which earns approx R30,000 p/a. Do we need to register as tax payers in SA?

    • Tim says:

      Hi Paula,

      Thanks for the question.

      Firstly, how long have you been living in South Africa as permanent residents? Does your husband’s part time job earn him a salary of +/- R30 000 p/a? What is the figure that you earn from overseas and how is that paid into your account? The short answer is no, you will not need to register or pay tax in South Africa, your earnings are too low for that. However this changes if you are earning a significant amount from overseas and this gets paid to you as an effective salary. I’d like to explore this, send me a mail on tim@taxtim.com and we can have a look further.

      Regards,
      Tim

  3. Jule says:

    Hi Tim,

    I have a small business that brings in +- R50k p/a. However it is still new and there are quiet months, so my father helps by giving me a small amount monthly (which is taxed seperately on his side ). If I add the amount given to me by him my annual income is over R60k. Does this mean I should have been paying tax already?

    • Tim says:

      Hi Jule,

      Thanks for the great question – keep them coming!

      The R50k p/a is this profit or turnover and is the business a registered entity or in your name? If the amount is before expenditure then no you wont need to pay any tax as it below the threshold (provided the business is basically you and not a separate entity). The money given to you from your dad, is this just a gift which he gives every now and then or is it a monthly amount always being the same? If it is just an irregular occurrence then usually this wouldn’t be taxable in your hands.

      I hope this helps, please ask another question if you need more clarity.

      Regards,
      Tim

      • Angi says:

        Hello

        Threshold for a business is what amount exactly? per month as it can vary from season to season

        Many thanks

        Angi

        • Tim says:

          Hi Angi,

          If the business is in your personal name (not a separate registered company) then the threshold is the same as for an indiviudal of R63 556 before any tax is paid.

          Regards,
          Tim

  4. Leeyah says:

    Hi Tax Tim, I am a South African university student that got a part time job where i will be earning 3000 a month. would i be required to pay tax on the money I will be earning?

    • Tim says:

      Hi Leeyah,

      Fortunately for you, you will not need to pay tax on your earnings. Depending on how the employer works they may withhold some taxes on your earnings. However you are below the tax paying threshold so if they do you can claim this back at year end. I suggest registering as a taxpayer if you haven’t done so already. You can do this easily at http://www.taxtim.com – just follow the easy steps.

      Regards,
      Tim

  5. Annelize says:

    Hi Tim,

    If my annual earnings for 2007/2008 tax year was R59001, do i need to pay income tax on it?

  6. mari says:

    If I earn R5500 per month do I need to pay tax. If I was not working for a period of time do I have to register for tax.

    • Tim says:

      Hi Mari,

      If you were working for an employer, they would have been paying over employees tax (PAYE) for you. Due to you not having worked the entire year you will be entitled to that PAYE back as a refund so I would recommend registering as a taxpayer and submitting your tax return:)

      Go to the TaxTim register for a tax number page and follow the easy steps.

      Regards,
      Tim

  7. Nicole says:

    Hi Tim.

    I am starting my own part-time photography business (from home). Some months I could make R5000, and some months up to R15000. I just want to know, as I am not a registered company, would I only pay income tax on the months I make over the tax bracket? And do I pay tax on my total income – or do I pay tax on my take home profit? Ie – I earn R15000 a month, but after business costs, medical aid, car insurance, food, etc. I come out with R6000 – do I only pay tax on the R6000?

    Thanks so much. Would really appreciate your help!!!

    • Tim says:

      Hi Nicole,

      I think you asked the question on the website help-desk, I’ve answered there, but briefly you would pay tax on the profits. Remember to treat the “business” separately from your personal expenses. You would pay tax on your total profits for the year regardless of some months being different from others.

      Let me know if you would like more information after seeing my response on the help-desk.

      Regards,
      Tim

  8. Melanie says:

    Hi there I am currently emplyed and earn a salary of which i do pay tax. If i sell good on the side and my profit is =\-R1000p.m. do i need to declare that income, and can i claim back tac that was charged by the supplier. No i am not a registered company

    • Tim says:

      Hi Melanie,

      Thank you for the question!

      You won’t be able to claim the VAT from the supplier unless you are a registered VAT Vendor. You must declare the profit you earned from selling goods on the side under “local income” on the tax return. You would declare all your income and any business expenses that got you to that profit figure!

      Regards,
      Tim

  9. bertus says:

    Hi TIm bertus here I am going to start a blog to make money it going to come over sea in check and into paypal to my bank acount I know I am going to pay tax on it is it better to get a tax consultant or a bookeeper and how can I train my self to know I am paying the right tax thanks in advanced.And when will I know when to pay tax.
    Best Regards
    Bertus

    • Tim says:

      Hi Bertus,

      If you are going to run the blog in your own name and not as a separate company then the tax will be paid on the incomes and expenses you earn and spend purely related to your blog. When you submit your tax return you will include all this under the “local business income” and you must translate all the foreign income at the average exchange rates, which you can find on the SARS website (soon to be on the TaxTim site as well). This is separate from your personal expenses like medical aid and retirement annuity fund contributions. You will register as a provisional taxpayer and submit returns on 31 August and 28 February each year as well as a final return.

      My suggestion is to keep a record of all the incomes and expenses on a monthly basis on a spreadhseet and have a go at submitting your own returns using sites like TaxTim to guide you as to what to do.

      Let me know if you have any further questions!

      Regards,
      Tim

  10. Peter says:

    I’ve been staying abroad for the last 3 years with no income. Does SARS care to know your whereabouts and how long you are abroad etc?

    If I have to invest some funds offshore do I still qualify for no tax return/tax payable if the annual income from those investments is less than the threshold of R60k (which is basically total annual income since I have no local income).

    I’m interested to know what the tax threshold actually means. On one website it was mentioned that it is just the rebates added up, does that mean the tax threshold is less if the annual income is from foreign income?

    Thanks

    • Tim says:

      Hi Peter,

      SARS is interested in where you are living, but only from a tax point of view. Assuming you have not made formal application to emigrate out of South Africa and thereby give up your SA passport or you have stated your intention to never come back to South Africa for longer than a short holiday you will still be considered a tax resident. This means that all income earned from anywhere in the world will be taxable in your hands. There are of course various exemptions if you live overseas on income earned from employment etc. You state that you have no employment income, but are going to invest funds offshore. Interest earned from an offshore investment is only subject to tax after the first R3 700 has been taken off and foreign dividends are subject to a 15% tax.

      Effectively though if you are under 65 then your income less than R63 556 for the 2013 will not be subject to tax regardless of where it was earned or where you are living because a South African ordinary resident is taxed on their world wide income.

      The website you found that information on was slightly incorrect because the rebate represents 18% of the tax threshold. The first R160 000 is taxed at 18%, but you are allowed a primary rebate of R11 440 which is 18% of R63 556.

      I hope that answers your question?

      Regards,
      Tim

      • Eugene says:

        Hi Tim,
        in this blog you say:
        “Assuming you have not made formal application to emigrate out of South Africa and thereby give up your SA passport, or…. …….. you will still be considered a tax resident”

        Do I have to give up my passport if I emigrate?
        DO emigrants loos the passport on emigration?
        I do not think this is correct.
        Please advice?

        • Tim says:

          Hi Eugene,

          When you officially emigrate from South Africa you are effectively giving up your citizenship and therefore hand in your official papers, you will no longer be seen as a South African citizen. Your tax affairs get taken care of and you are deemed to have disposed of all your assets.

          The other option is to not formally emigrate and then when you leave you become, “a temporary resident abroad” and depending on your situation you most likely will not be a tax resident until you come back to SA. You would need to look at that on a case by case basis.

          Regards,
          Tim

      • Norman says:

        Hi Tim,

        You responded to a posting saying that “The first R160 000 is taxed at 18%, but you are allowed a primary rebate of R11 440 which is 18% of R63 556.”

        I understand that I would not pay tax on the first R63 556 that I earn during the tax year, but I don’t understand how the primary rebate works. In my mind the equation is as follows: R160 000 – R63 556 = R96 444 – 18% tax (R17359.92) = R79084.08 (what I am left with). Where does the R11 440 fit in? Surely I don’t receive an additional rebate of R11 440 because I am already exempt from paying tax on the first R63 556?

        Forgive my ignorance, but I can’t seem to bend my mind around this one and I sure would appreciate your explanation.

        Regards,
        Norman

        • Tim says:

          Hi Norman,

          Income Tax is levied on the first R160 000 at 18%. This rate increases as the amount of taxable income increases. Once the actual tax payable is calculated SARS then allows a rebate of a certain amount depending on your age.

          Essentially what I meant by the rebate being a percentage of the tax threshold, is that the tax threshold is used to calculate the rebates each year. SARS will determine the amount of the tax threshold and then multiply that by 18% to come up with the rebate amount.

          So R160 000 * 18% = R28 800 – R11 440 = R17 360 or;
          (R160 000 – R63 556) *18% = R17 360

          So in effect it is the same calculation.

          I hope that answers your question.

          Regards,
          Tim

  11. Nicola says:

    Hi Tim,

    I am in the process of developing a day spa and our therapists will be earning between R4,000 and R6,000 per month + commission (10%). Will they be required to pay tax?

    Thank you.

    • Tim says:

      Hi Nicola,

      Anyone earning more than R63 556 per annum from employment income will have to pay tax. So for your employees earning more than R4 300 or so a month they will have to register and pay tax. You will need to register as an employer with a PAYE number and complete withhold the taxes as per the PAYE table.

      Let me know if you have any other questions?

      Regards,
      Tim

  12. jessica says:

    Hi Tim,

    If someone has a small business, that mostly work during the weekend as it is outdoors activity for pleasure, and the customers must phone and make booking to be able to come. The owner who is the only person working there, doesn’t take a salary out of the money he gain on the business. There are pick seasons and down seasons. Beginning of the year it is dead and towards the end of the end its busy. The income vary all the time. He uses that income to pay the expenses, or take from it sometimes to pay his personal stuff. What tax should the person pay? Must the person declare his business, which it is most consider as a private club?
    thank you.

    • Tim says:

      Hi Jessica,

      Thank you for the question and becoming part of the TaxTim family!

      Unfortunately in order to be a “private club” you would have to register this type of business with SARS as a club and there are different tax treatments. It does sound like a normal business though and so tax would need to be paid as per the normal tax tables.

      Assuming that the business isn’t registered separately and so is in the name of the person running it, they would need to declare all the income and expenses on their tax return under “Local business” So the best thing to do is to keep a record of all the money coming in and going out and work out what the profit is. Do this before taking any money for personal use. SARS will only allow you to deduct the expenses used for the business, not for personal use. Remember that profit made belongs to the owner. So separate business and personal income and expenses.

      Depending on the profit, tax will be paid as per the tables.

      TaxTim walks you through all this by asking the right questions and holding your hand throughout the process so you never feel like you have left anything out.

      Let me know if you have any further questions?

      Regards,
      Tim

  13. Peter says:

    Hi Tim

    You’re a great help! Fast and excellent advice. Thank you very much for your response and service. Great to have first class South African service! Good to know that the tax threshold holds on total worldwide income. Now the questions are:-
    (1) Any idea where the rules are for what SARS considers resident or non-resident. I had read that even if you don’t spend most of the year in South Africa, but you have a residence here or family here, you’re still considered an ordinary taxable resident by SARS? I think there is also a category of someone temporarily living overseas, thats not on a short holiday, but is considered resident in South Africa because they have an intention to return to South Africa?

    (2) Is it advisable to submit a tax return if the annual income is below the tax threshold, and that the only income would be a single foreign investment. What if the annual income is above the tax threshold but below R120,000. I believe that up to R120,000 you are not obliged to submit a tax return. What benefits are there if I do anyway.

    (3) What constitutes annual income? For example, if I have an foreign investment that is worth R10,000 in unit trusts and it grows by 10% (for the year). I do not sell any of my units or make any withdrawals for the tax year — I just let it be — then what amount is considered part of my annual income?

    Thanks
    Peter

    • Tim says:

      Hi Peter,

      Thank you very much for the compliments and we hope you spread the word about TaxTim.

      To answer your questions:

      1. If you were born in South Africa and you have lived here all your life and intend to stay here, excluding leaving for short periods of time on holiday or small work trips, then you will be considered an “ordinary resident” What this means is the place you intend to return to after all your “wonderings” which ideally means your home. So having your whole family and a home in South Africa would definitely indicate that you consider South Africa your place of return. Many people consider themselves no longer tax residents when they leave SA, however unless you formally emigrate with the South African Reserve Bank and SARS you are still seen as a resident. Due the fact that any services you perform to earn income are done out of SA, SARS allows that income to be exempt as the place where work is performed is the place where tax becomes payable and so allows all these special deductions and exemptions for persons living abroad.

      2.If you earn income from a foreign source or have assets overseas of over R50 000 then you are obliged to submit a tax return. In fact if you earn taxable income, that is profit, from a non-employment source of over R20 000 then you are obliged to submit a return as well and register as a provisional taxpayer regardless of the tax threshold – currently R160 000. However this is for salaried employees earning no other income. If the income is above the threshold, but below the R160 000 you will be taxed in South Africa, unless taxed overseas already. For foreign interest there is a limited exemption on the first R3 700 and for foreign dividends these will only be taxed at 15%.

      3. Gross income is any amount which is not Capital or deemed to be Capital (that being a specific part of the Income Tax Act) In your example, you would probably attract foreign interest and dividends on that investment depending on the nature of it. The investment house that you have invested this money with will most likely send you a tax certificate showing this. If you are not selling any of these unit trusts, but there is growth in value this would be capital and only subject to tax when you actually make a sale. This would be subject to capital gains tax which at the most is at an effective rate of 13.3%.

      I hope this answers your questions, please let me know if you have any others.

      Regards,
      Tim

  14. HOLLEE says:

    i have a temp job that pays R5750.00p/m as a temp do i pay tax or paye? if so can i claim it back.

    • Tim says:

      Hi Hollee,

      PAYE is a form of tax, but paid up front rather than at the end of the tax year. It is a PAY-AS-YOU-EARN which your employer will deduct before paying over your salary. Do you know if your employer deducts 25% or uses a tax table to deduct the PAYE. It would depend on how many months you have worked and at what rate the employer deducts PAYE if you would be entitled to any refund?

      When did you start temping and what is the amount taken off each month?

      Regards,
      Tim

  15. EtienneP says:

    Hi,

    I work in the US for most of the year for a company that is based in the Grand Cayman Islands, I spend about 6 to 8 weeks every six months in South Africa. The company pays my wages into an account I have with a US bank. Every once in a while I would transfer the funds from the US account to my local South African account. I have been working like this for the last four years. Now, my question is, do I need to pay tax here in South Africa?

    Thanks

    Etienne

    • Tim says:

      Hi Etienne,

      On the face of it you would not need to pay tax in South Africa as any taxes you paid on the income earned would most likely be paid in the US as you are living and working there? You also meet the definition of section 10(1)(o)(ii) of the South African Income Tax Act which exempts income earned if you are out of the country for longer than 183 days and 60 of those are consecutive, I am correct in assuming you meet these criterion? Have you ever registered as a taxpayer in SA and do you pay taxes in the US?

      The principle is that you would never be taxed twice on the same income so any taxes paid in the US would go towards your SA tax liability, but because you are out of the country for so long you would not be liable for SA tax.

      I hope that answers your question?

      Regards,
      Tim

      • Eugene says:

        Hi Tim,
        what happens with nontaxed incomes earned from employment while loger then 183/60 days outside RSA?
        In this case this is Cyman Island company, and probably the person does not pay Income tax as there is no such in the Cymans.
        Is this person taxable in SA?

        • Tim says:

          Hi Eugene,

          Generally South African’s are taxed on their worldwide income regardless of where it comes from. However if you work outside of SA for longer than 183 days of which 60 days were in a row then that income earned isn’t taxed in SA. If they payment comes from the Cayman Islands, even as there is no tax there, you will still be exempt from paying tax on that income provided you have a contract with an employer for that work you did.

          I hope that helps?

          Regards,
          Tim

  16. blaino says:

    Tim, how much tax do I pay if I earn R66000 p/a?

    • Tim says:

      Hi Blaine,

      On R66 000 per year you would pay tax of R440.

      We have a handy tax calculator on site for you to calculate your monthly or annual after tax salary.

      Regards,
      Tim

  17. Ann says:

    HI Tim,
    Do I qualify for tax refund if I earn R7000 a month and employed as a casual worker and have worked for less than a year. I pay PAYE of R307 a month

    • Tim says:

      Hi Ann,

      I would need to know the number of months you have worked for the 2012 tax year before I am able to answer the question.

      Regards,
      Tim

  18. sarah says:

    I am doing my boyfriends Pay slip for him and he Earns R10 500.00 what will the Tax be on that as his boss does not give him a good pay slip

    • Tim says:

      Hi Sarah,

      If your boyfriend earns R10 500 per month with no deductions then his pay, including PAYE and UIF would look like this:

      Take home pay = Gross salary – PAYE – UIF
      UIF / Unemployment Insurance Fund is levied at 1% of your taxable income, at most R148.72/month
      Take home pay = R 10500 – R 936.66 – R 105
      Take home pay: R 9458.34 :)

      Regards,
      Tim

  19. Summer says:

    Hi Tim

    I am unemployed and have someone that wants to send me 10 000 Australian Dollars as a gift. Would I have to pay tax on this money? Can they just transfer it to my account and I withdraw it?
    How does the gift of giving money, work?
    Regards

    • Tim says:

      Hi Summer,

      You can receive a gift of this amount, but you would still need to include this in your tax return if you do actually submit one. It would be exempt from tax though.

      When that person sends the money from Australia, your local bank would need you to complete a Balance of Payments form and tick the donations box as the reason. Your bank will guide you on this. You need to ask them for the SWIFT code which is what international banks use for transfers inter-country.

      Regards,
      Tim

      • Summer says:

        Tim

        Can I first get the money transferred to my account before I go to the bank to convert it to Rands, if I have the swift code for the bank? Or do I first go to the bank before they deposit it?

        Thank you for your help regarding this.

        Regards
        Summer

        • Tim says:

          Hi Summer,

          The funds will be deposited into your account like a normal transfer, but not be available. Your bank will notify you of the deposit and the need to complete the Balance of Payments form which you will do before they sell the AUS$ and convert to Rands and then release it into your account.

          Regards,
          Tim

  20. Michelle K says:

    Hi Tim

    I have recently just gotten married.

    My family overseas have deposited the equivalent of R300000.00 (three hundred thousand ZAR) into my bank account.

    I’d like to know whether this is taxable or not. And how would I list it on my tax return?

    • Tim says:

      Hi Michelle,

      This a pure gift for your marriage and as long as it was for your wedding gift and a once off it won’t be taxable and you shouldn’t need to disclose this on the tax return. If you wish to you can put it under amounts not taxable and call it wedding gift.

      Regards,
      Tim

  21. vivienne says:

    I am getting a gross salary of R5500 . i need to know what is the UIF on that is

  22. Norman says:

    Tim,

    I wish you a Merry Xmas and a Prosperous New Year.

    Thanks for offering this service.

    Regards,
    Norman

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