Tax is a percentage of your money that people and businesses have to pay to the government. The government then uses this money to provide services like schools, hospitals, roads, and other important services.
In South Africa, the South African Revenue Service (SARS) is in charge of collecting tax and making sure everyone follows the tax rules.
The government needs tax money to keep the country running and to provide essential services that we all use. Here are some of the main things tax money helps pay for: Education – Public schools, universities, and teachers' salaries.
Healthcare – Government hospitals, clinics, and emergency medical services.
Public Safety – Salaries for police officers, firefighters, and the military.
Infrastructure – Roads, bridges, railways, and airports.
Social Welfare – Grants and financial support for pensioners and people with disabilities.
South Africa’s tax system includes different types of taxes that apply to individuals, businesses, and transactions. These fall into two main categories:
1. Direct Taxes (Taxes on Income and Profits)These taxes help fund public services such as education, healthcare, infrastructure, and social programs.
| Direct taxes: | Indirect taxes: |
|---|---|
| Levied on people and entities | Levied on goods and services |
| Are typically proportionate to the taxpayer’s income or assets | Are based on the value of the good or service |
| Considered a progressive tax. | Considered a regressive tax |
| Non-transferrable, the tax is borne by the taxpayer | Transferrable, with consumers ultimately paying the tax. In the case of customs duties, excise taxes, and tariffs, the cost is embedded in the price of the product or service |
| Examples include income tax, corporate tax, and property tax | Examples include VAT, GST, customs duties, and tariffs |
SARS collects tax in different ways depending on whether you are an employee, self-employed, or a business owner.
1. Pay-As-You-Earn (PAYE) – For Employees
If you work for an employer, tax is deducted from your salary before you are paid. Your employer pays these amounts over to SARS every month, so you don’t have to worry about making separate payments.
Example: If your salary is R20,000 per month, your employer deducts the required tax before paying you.
2. Provisional Tax – For Freelancers, Business Owners & Those Earning Investment or Rental Income
If you earn income without an employer (such as freelance work, running your own business, earning rental income, or receiving substantial interest or dividends), you must pay tax directly to SARS in advance, in two main payments:
You also need to submit provisional tax returns (IRP6) to SARS for the first and second payments to declare your estimated income and calculate how much tax to pay.
Example: If you're a freelance designer earning R300,000 per year, you'll estimate your annual income and pay tax in two stages, with a return submitted each time.
3. Value-Added Tax (VAT) – For Businesses Selling Goods & Services
Businesses that earn more than R1 million per year must register for VAT. They must charge 15% VAT on sales and then pay this collected VAT to SARS.
Example: If a retail store sells an item for R1,000, it must add 15% VAT (R150), making the total price R1,150. The R150 is then paid to SARS.
These tax collection methods ensure that SARS receives the necessary funds to support government services and infrastructure
South Africa follows a progressive tax system, which means that the more you earn, the higher the percentage of tax you pay. Instead of a flat rate for everyone, income tax is divided into different brackets, with each bracket taxed at a different percentage.
This system ensures that people who earn less pay a lower tax rate, while those who earn more contribute a larger share of their income in taxes. Your income is not taxed at a single rate—instead, different portions of your income are taxed at different rates according to the official SARS tax tables.
Income Tax Brackets for 2024/2025
| Taxable Income (Rands) | Tax Rate |
|---|---|
| R0 – R237,100 | 18% of taxable income |
| R237,101 – R370,500 | R42,678 + 26% of income above R237,100 |
| R370,501 – R512,800 | R77,362 + 31% of income above R370,500 |
| R512,801 – R673,000 | R121,475 + 36% of income above R512,800 |
| R673,001 – R857,900 | R179,147 + 39% of income above R673,000 |
| R857,901 – R1,817,000 | R251,258 + 41% of income above R857,900 |
| Over R1,817,001 | R644,489 + 45% of income above R1,817,000 |
South Africa’s tax system is based on two main principles:
SARS uses these rules to decide who must pay tax and how much they owe. This ensures that both residents and non-residents are taxed fairly based on where their income comes from.
Tax Residents (Worldwide Income Tax System)
If you are a South African tax resident, you must pay tax on all income you earn, whether it comes from inside or outside South Africa.
Example: If you live in Cape Town and work remotely for a US-based company, SARS still requires you to pay tax on that income in South Africa.
If you are not a tax resident, you only pay tax on income earned from South African sources. Any income you earn from outside the country is not taxed by SARS.
Example: If a British consultant works in South Africa for six months, they only pay tax on the income earned from South African clients—not on any income from the UK.
IF you are unsure click below ask Tim!
SARS uses two main tests to decide whether someone is a South African tax resident:
1. Ordinary Residence Test
You are a tax resident if South Africa is your permanent home or the place where you plan to live indefinitely.
Example: A South African citizen working full-time in Johannesburg is automatically a tax resident.
2. Physical Presence Test
Even if you don’t have a permanent home in South Africa, you can still be classified as a tax resident if you meet all three of these conditions:
Example: A German freelancer who has lived in South Africa for four years and spent more than 915 days in total will be considered a tax resident—even if they originally planned to stay temporarily.
Different taxpayers use different tax forms when filing tax returns. These forms vary depending on employment type, business structure, and income sources.
| Form Name | Who Uses It? | Purpose |
|---|---|---|
| IRP5 | Employees | Summarizes salary(income),deductions (pension, medical aid etc.) & PAYE tax deducted |
| ITR12 | Individuals | Annual personal income tax return |
| ITR14 | Companies & Corporations | Annual business income tax return |
| IRP6 | Provisional Taxpayers | Submitted for Provisional Tax payments |
SARS collects tax in two main ways:
1. Pay-As-You-Earn (PAYE) – For Employees
If you work for an employer, tax is deducted from your salary each month before you get paid. Your employer then pays these tax amounts over to SARS.
Example: If your salary is R30,000 per month, your employer deducts the necessary PAYE tax from your salary and pays the balance to you. The deducted tax is then paid over to SARS — typically later that month — by your employer.
2. Provisional Tax – For Self-Employed, Freelancers & Investors
If you don’t have PAYE deductions on your employment income and/or earn income earned from your own work or business (not through an employer or company), you must submit two provisional tax returns on which you estimate your income for the tax year and pay your tax in advance twice a year.
Example: Let’s say you’re a freelance designer and you expect to earn R500,000 for the year. You’d need to estimate your tax and make two payments—one in August and another in February—to avoid penalties. If you end up earning more than you thought, you can make a third (optional) payment in September to cover the difference and stay on SARS’s good side.
Annual Tax Filing Dates (Personal Income Tax)
| Taxpayer Type | Deadline |
|---|---|
| Non-Provisional Taxpayers (Employees) | July – October (Exact dates change yearly) |
| Provisional Taxpayers (Freelancers, Self-Employed, etc.) | July – January (Exact dates change yearly) |
Provisional Tax Deadlines (For Self-Employed & Investors)
Before you can start paying tax, you need to register with SARS and get a tax reference number.
Step-by-Step Guide to Registering for a Tax Number
Alternative Options:
For more information on how to register visit:
https://www.taxtim.com/za/tax-guides/get-a-tax-number
Not everyone in South Africa is required to pay tax. Your tax liability depends on how much you earn, where your income comes from, and whether SARS has already deducted tax through your employer.
There are three key factors that determine whether you need to pay tax:
Heads up: Just because PAYE was deducted from your salary doesn’t mean your tax is fully sorted. If you had more than one job or IRP5 during the year, the total PAYE deducted might not be enough to cover the full tax you owe—so a top-up may be needed when you file your return.
IF you are unsure click below ask Tim!
South Africa has a minimum tax threshold, which means that if your total income is below a certain amount, you don’t have to pay tax.
Each year, SARS sets this threshold based on factors like age and income level. If your earnings fall below this limit, you are not required to file a tax return or pay any income tax. However, if you earn above the threshold, you must register and pay tax as required by SARS.
2024/2025 Tax Thresholds: How Much Can You Earn Before Paying Tax?
| Age Group | Annual Income Below Which You Don’t Pay Tax |
|---|---|
| Under 65 | R95,750 |
| 65 – 74 (Senior Citizens) | R148,217 |
| 75 and Older | R165,689 |
If you earn less than these amounts in a tax year, you do not need to pay tax or file a tax return.
How tax is applied depends on where your money comes from. Some income types have tax automatically deducted before you even see the money (very important to note, that this might not be the final tax due on your total income earned during the tax year), while others mean you have to handle the tax payments yourself. Knowing the difference helps you avoid surprises when it’s time to file your tax return!
1. Salary Income (PAYE – Tax is Deducted Automatically)
If you are an employee, tax is deducted before you get paid through the Pay-As-You-Earn (PAYE) system.
Example: If your monthly salary is R25,000, your employer automatically deducts tax and pays SARS before paying you.
2. Freelance & Self-Employed Income (Provisional Tax – You Handle Payments Yourself)
If you work for yourself, no one deducts tax for you. You must estimate and pay your tax twice a year along with the submission of your IPR6.
Example: A freelance writer earning R350,000 per year must calculate their estimated tax and pay SARS in August and February.
3. Rental Income (Taxable, But Deductible Expenses Allowed)
If you rent out property, SARS requires you to pay tax on rental income, but you can deduct certain expenses (like bond interest, rates, levies, and repairs).
Example: If you earn R120,000 in rental income but spend R40,000 on property expenses, you only pay tax on R80,000 profit.
4. Investment Income (Dividends, Interest & Stock Profits)
Example: If you sell shares and make R50,000 in profit, only R4,000 ((R50,000 - R40,000)x40%) is added to your taxable income.
Are You Already Paying Tax? Check Before You Worry
Before stressing about tax payments, first check whether tax is already being deducted for you.
Example: If your bank tax certificate shows a dividend of R8,000, but you only received R6,400, the missing R1,600 was the tax deduction that is already paid over to SARS.
Special Cases: Foreign Income & Tax Exemptions
Some people don’t need to pay tax or qualify for special exemptions, depending on where they earn their income.
Foreign Income (Exemptions & Partial Taxation Rules)
Example: A South African engineer working in Dubai earning R2 million per year will only pay tax on income exceeding R1.25 million.
Tip: If you work abroad, make sure you meet the SARS requirements to claim the foreign income exemption.
Quick Reference Table: Who Pays What?
| Income Type | How Tax is Paid | Tax Deducted Automatically? |
|---|---|---|
| Salary (Employee) | PAYE (Employer Deducts) |  YES |
| Freelance & Self-Employed | Provisional Tax (You Handle It) |  NO |
| Rental Income | Taxed on Profits | NO |
| Investments (Dividends, Interest, Stocks) | Dividend Tax, Interest Tax, CGT | Sometimes |
| Foreign Salary | Taxed on worldwide income (R1.25M exemption possible) | NO |
Note: PAYE and provisional tax are not the final amounts owed. Everyone still needs to submit an income tax return so SARS can calculate your total tax based on all your income. See Section 4 for more details.
Not everyone in South Africa has to submit a tax return, but whether you should file depends on:
Even if you don’t legally have to submit a tax return, it’s still a good idea to do so. Filing a tax return ensures you remain tax-compliant, helps you avoid future issues with SARS, and allows you to claim any refunds you may be owed. A clean tax record can also help when applying for loans, visas, or tenders & clean tax record is required for a deceased person before the estate taxes can be finalised?
You MUST submit a tax return if:
|
You earned more than R500,000 during the tax year. |
|
You had multiple sources of income (salary + rental income, freelance work, or investments). |
|
You are self-employed, a freelancer, or a business owner. |
|
You earned foreign income (even if it is tax-exempt, SARS still needs to see it). |
|
You want to claim deductions (e.g., medical aid, retirement annuities, business expenses). |
|
SARS has requested you to submit a return (even if you think you don’t need to). |
You DO NOT need to submit a tax return if:
|
Your total income was less than R500,000 for the year. |
|
You had one employer for the full tax year, and tax was deducted via PAYE. |
|
You earned no additional income (rental, freelance, investment income, etc.). |
|
You did not receive taxable allowances, deductions, or refunds |
Note: In some cases users fullfil all these items but SARS still requests the tax return to be submitted.
Important: Even if your income is below R500,000, filing a tax return is still recommended. It ensures your tax affairs are in order and can prevent issues if SARS requests proof of income in the future.
IF you are still unsure click below ask Tim!
Even if you are below the tax threshold or meet exemption rules, there are still good reasons to file a tax return:
Claiming Tax Refunds: If too much tax was deducted, SARS owes you money—but you won’t get it unless you file.
Avoiding SARS Audits: If you fail to submit, SARS may assume you are avoiding tax and trigger an audit.
Building a Clean Tax Record: Banks, lenders, and visa applications often require proof of tax compliance. A clean tax record is also required for a deceased person before the estate taxes can be finalised?
Claiming Deductions: If you have medical aid, retirement savings, or business expenses, you need to file to reduce your tax bill.
Quick Tip: A person who worked part of the year and was retrenched may have overpaid tax and could be owed a refund—but must file a tax return to claim it.
Failure to Submit a Tax Return Has Serious Consequences
If you are required to submit a tax return and fail to do so, SARS can impose penalties and interest charges.
Penalties for Non-Submission
SARS charges monthly penalties for each late or missing tax return.
Example: A taxpayer earning R800,000 per year who does not file a tax return for 12 months could owe R192,000 in penalties (R16,000 x 12 months).
Interest on Late Payments
If you owe tax and do not file or file late, SARS will charge interest on the unpaid amount from the date the tax was due.
SARS Can Estimate & Assess Your Tax
If you fail to submit your tax return, SARS may estimate your taxable income and issue an assessment based on their own calculations.
Example: If you were self-employed and failed to submit, SARS could estimate a high income and charge tax accordingly—even if you earned less.
How to Check If You Need to Submit a Tax Return
You can check whether you need to file a tax return by logging into SARS eFiling & checking your tax compliance status.
Step-by-Step Guide to Checking Your Tax Filing Status
If you need more information on how to check you tax compliance status pleas eread our Blog: https://www.taxtim.com/za/tax-guides/how-to-request-your-tax-compliance-status-on-sars-efiling
Option 1: Use TaxTim (Recommended First Choice :)
TaxTim is the easiest way to complete your tax return online with step-by-step guidance.
Option 2: Online via SARS eFiling
Option 3: SARS MobiApp (For Simple Returns)
Option 4: Visit a SARS Branch (By Appointment Only)
What is Provisional Tax?
Provisional Tax is a system designed for individuals who earns income other than or in addition to income on which tax was already deducted from (like employees with PAYE). These individuals must submit provisional tax returns twice a year on which they estimate their income and pay the applicable tax.
If you earn extra income outside of regular employment, such as freelance work, rental income, or business earnings, you might be required to register as a Provisional Taxpayer.
Who Needs to Pay Provisional Tax?
Freelancers & Independent Contractors
Note: You get two types of independent contractors, ones that are on payroll and others which are not. However, both can claim expenses. PAYE is deducted from the income however at a lower rate or at a fixed rate depending on the arrangement.
Example: A freelance graphic designer earning R600,000 per year must register for Provisional Tax and make payments in August and February.
Business Owners & Sole Proprietors (Self employed)
Example: A freelance graphic designer estimated income is R 600 000 for the tax year. The freelancer will need to register for provisional tax, if not already, and submit two provisional tax returns during the tax year and pay the applicable tax.
Property Owners Earning Rental Income
Example: If you earn R400,000 from a salary and R200,000 from renting out a flat, you’ll need to include the rental income in your Provisional Tax payments.
Or, if you earn R60,000 purely from rental income, you’ll still need to register for Provisional Tax because you pass the R40,000 threshold.
People who receive a large portion of their income from interest or dividends—such as those living off savings or retirement funds
If your total investment income (which include interest, foreign dividends and rental income) exceeds the total of R30,000, you are classified as a provisional taxpayer and must submit the two provisional tax return during the applicable tax year
Provisional Tax requires TWO advance payments per tax year:
First Payment – 31 August
Second Payment – 28 February
Third Payment (Optional)– 30 September
If the first two payments were underestimated, you can top up your tax to avoid penalties.
Step 1: Estimate Your Total Income for the Tax Year
Step 2: Apply the Income Tax Brackets
Step 3: Deduct Any PAYE Already Paid
Step 4: Pay the Required Amount in Two Installments
Example Calculation:
A freelancer estimates R500,000 taxable income for the year:
Use our Tax Refund Calculator to estimate your tax amount
SARS imposes penalties & interest for late or missed payments.
Late Payment Penalties
Example: If you owe R50,000 but miss the February deadline, SARS adds a R5,000 penalty plus interest.
Underestimating Income Can Lead to Additional Penalties
Example: A freelancer expected R400,000 income but actually made R600,000. Their tax payments were too low, so SARS adds an underpayment penalty.
If you missed filing tax returns for one or more years, SARS still requires you to submit them. Ignoring outstanding tax returns can lead to serious consequences, including:
Example: If you were required to file a return in 2020 and 2021 but did not, SARS will still consider those returns outstanding and apply penalties until they are submitted.
You must submit outstanding tax returns if:
Example: A person earning R500,000 per year who failed to submit returns for 2018, 2019, and 2020 still has to file those returns and pay any outstanding tax.
When You May Not Need to File Past Returns
You may not need to submit past tax returns if:
Example: If you only earned R50,000 in 2019, you did not meet the tax threshold, and SARS may not require a return.
Tip: If you’re unsure whether you need to file past returns, check your SARS eFiling profile or contact SARS for confirmation.
What Happens If You Don’t File Past Tax Returns?
If SARS detects that you have missing tax returns, they will take the following steps:
How SARS Handles Unfiled Tax Returns
Example: A person who last filed a tax return in 2017 may find that SARS has automatically assessed their tax based on incorrect salary estimates.
Penalties for Not Filing Past Tax Returns
Late Submission Penalties (Per Outstanding Return)
Example: If you did not file returns for 2019, 2020, and 2021, SARS could charge between R250 and R16,000 per month per year until the returns are submitted.
Interest on Unpaid Tax
Example: If you owed R20,000 in 2019 but never filed, SARS will continue adding daily interest until the debt is settled.
Tip: The longer you wait to file, the higher the penalties and interest will be. It’s always better to submit overdue returns as soon as possible.
How to Submit Past Tax Returns on eFiling
If you missed filing tax returns but want to avoid penalties, you may qualify for SARS’s Voluntary Disclosure Program (VDP).
What is VDP?
Who Can Apply?
Who CANNOT Apply?
Example: A freelancer who didn’t declare income from 2018 to 2022 applies for VDP to file past returns without excessive penalties.
Yes, SARS has multiple ways to detect unfiled tax returns, using third-party data matching to track undeclared income.
How SARS Identifies Missing Tax Returns
Example: If a freelancer earns R1 million in a year but never files a tax return, SARS can detect this through bank records and issue a compliance notice.
Tip: Even if you haven’t received a notice yet, SARS may still be tracking your financial activity. Filing your tax returns on time helps avoid penalties and audits.
How to Stay Organized & Make Tax Filing Easier
Filing tax returns can be stressful, especially if you are self-employed, a freelancer, or have multiple income sources. The key to stress-free tax management is staying organized year-round.
This section covers practical ways to simplify tax filing, reduce errors, and ensure you are always compliant with SARS.
SARS requires taxpayers to keep supporting documents for five years, so having a system for tracking income and expenses is crucial.
