South African tax terms explained (English)

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How to get a tax number in South Africa
How to submit your return to SARS
How to register for SARS eFiling
How to use SARS eFiling to file income tax returns
How to calculate how much income tax you will pay
How to calculate your tax refund
How to calculate tax on Retirement, Retrenchment or Death benefit lump sum payout
Provisional tax, how and when to pay explained

How to decide if you are a tax resident of South Africa
How to find out if you can deduct home office expenses
How to find out if your foreign income is exempt from income tax
How to find out if you are a provisional taxpayer in South Africa

What is an IRP5?
What is an IT3(a)?
What is an IT3(b)?
What is an IT3(c)?
What is an ITR12?
What is an IRP6?
What is SARS eFiling?
What is provisional tax? Am I a provisional taxpayer?
Calculate Wear and Tear / Depreciation using Interpretation Note 47
Definition of Disability / Impairment
Definition of a Public Benefit Organisation
Definition of Incur
Definition of Spouse
Definition of Proceeds
Definition of Partnership
Definition of Base Cost
Definition of Source Code
Definition of Public Office
Definition of Primary Residence
Definition of Tax Year
Definition of Tax Season
Definition of Income
What is a Medical Tax credit?
What is S10(1)(o)(ii) income?
List of business source codes

What is an IRP5?

An IRP5 is the employee's tax certificate that is issued to him/her at the end of each tax year detailing all employer/employee related incomes, deductions and related taxes. It is used by the employee specifically to complete his/her income tax return for a specific year.

What is an IT3(a)?

An IT3a is the same as an IRP5, except that it shows employee earnings from which tax has NOT been deducted.

What is an IT3(b)?

An IT3b is a Tax Certificate received from an institution such as a bank or financial services offerer which will be a summary of any interest and dividends both local and foreign that you would have earned by having money invested with one or more of these places.

What is an IT3(c)?

An IT3c is a Tax Certificate received from an institution such as a bank or financial services offerer which will be a summary of any disposals you may have made related to the holding of investments with any of these places.

What is an ITR12?

An ITR12 is the Income Tax Return for all individuals (including provisional taxpayers) for a particular tax year. This is what Tim is completing for you, based on your answers to his questions!

What is an IRP6?

An IRP6 is a Tax Return completed by provisional taxpayers, twice or (optionally) three times during the tax year to declare their income. Click here for instructions on how to complete your IRP6.

What is SARS eFiling?

SARS eFiling is a free online process for submitting your tax returns to SARS and replaces physical tax return submissions done manually. This free service allows individual taxpayers, tax practitioners and businesses to register for free and submit tax returns, make payments and perform a number of other interactions with SARS in a secure online environment. The website is accessible at

What is provisional tax? Am I a provisional taxpayer?

Provisional taxpayers are people who earn income other than a salary / remuneration. If you get income such as rental income from a property, interest income from investments or other income from a trade, you will always be a provisional taxpayer, even if you also earn a salary. However exceptions can apply, see the thresholds below. If you just earn a salary then you are a regular taxpayer and don't have to worry about filing provisional tax returns.

Regular taxpayers make their tax contributions to SARS via PAYE deducted off their paycheck and submit one tax return every year in February - an ITR12. Since provisional taxpayers earn money from other sources, they have to make payments to SARS manually and describe these payments in an IRP6 tax return. SARS wants provisional taxpayers to avoid paying one large chunk of tax in February, so two (or optionally three) payments are made during the year in August and February, with an IRP6 for each one. Provisional taxpayers also need to fill in an ITR12 tax return once during tax season (July - November), just like regular taxpayers do.

If you earn income from other sources, but the below exemptions apply, you are NOT a provisional taxpayer:
Answer a couple of quick questions from Tim to find out if you are a provisional taxpayer or not.
For more info or questions, see our article What is Provisional Tax? How and When?, our provisional tax blog post or the SARS website definition.

Calculate Wear and Tear / Depreciation using Interpretation Note 47

Wear and Tear or Depreciation is the decrease in value of an asset. SARS allows you to deduct this decrease each year based on the tables below, which you can then use towards replacing those assets if you wish. For example if your car cost R50,000 in the 2007 tax year, you can depreciate the car by R10,000 each year until 2011 and claim the R10,000 as a deduction, therefore paying less tax!

Use the calculator below to calculate your depreciation:

Base cost of the asset (in Rands): R
Date you got it: Month   Year
Tax year:
Type of asset:

Definition of Disability / Impairment

You are unable to perform certain functions in your daily life and this has been confirmed by a doctor. This means a moderate to severe limitation of a person's ability to function or perform daily activities as a result of a physical, sensory, communication, intellectual or mental impairment, if the limitation -

  1. has lasted or has a prognosis of lasting more than a year; and
  2. is diagnosed by a duly registered medical practitioner in accordance with criteria prescribed by the Commissioner.

Definition of a Public Benefit Organisation

Generally this is an organisation that does not work for profit and does not pay tax in or out of South Africa. The organisation is most likely involved with charitable work.

  1. which is -
    1. a non-profit company as defined in section 1 of the Companies Act, 2008 (Act No. 71 of 2008), or a trust or an association of persons that has been incorporated, formed or established in the Republic; or
    2. any branch within the Republic of any company, association or trust incorporated, formed or established in any country other than the Republic that is exempt from tax on income in that other country;
  2. of which the sole or principal object is carrying on one or more public benefit activities, where -
    1. all such activities are carried on in a non-profit manner and with an altruistic or philanthropic intent;
    2. no such activity is intended to directly or indirectly promote the economic self-interest of any fiduciary or employee of the organisation, otherwise than by way of reasonable remuneration payable to that fiduciary or employee; and
  3. where -
    1. each such activity carried on by that organisation is for the benefit of, or is widely accessible to, the general public at large, including any sector thereof (other than small and exclusive groups);

Definition of Incur

To incur something from a tax perspective would be to either pay for it using a form of currency or to be in the position where you will have to pay for something at some future date.

Definition of Spouse

Generally the spouse of the taxpayer is anyone that they are in union with as recognised under South African law and religious recognition.

"spouse", in relation to any person, means a person who is the partner of such person -

  1. in a marriage or customary union recognised in terms of the laws of the Republic;
  2. in a union recognised as a marriage in accordance with the tenets of any religion; or
  3. in a same-sex or heterosexual union which the Commissioner is satisfied is intended to be permanent

Definition of Proceeds

Procceeds received for an asset is generally the amount, whether in money or some other form, that the taxpayer received.

the proceeds from the disposal of an asset by a person are equal to the amount received by or accrued to, or which is treated as having been received by, or accrued to or in favour of, that person in respect of that disposal, and includes -

  1. the amount by which any debt owed by that person has been reduced or discharged; and
  2. any amount received by or accrued to a lessee from the lessor of property for improvements effected to that property.

Definition of Partnership

A partnership is an association between 2 - 20 people who are contractually bound to one another in order to operate a joint, profit-making business together. Each member of the partnership contributes their money, goods or services to a shared fund, agreeing that any profits made will be shared between the partners as per a contract between them. A partnership does not have to be registered with the companies registrar CIPC. Partners in a partnership are taxed on their percentage of the taxable income of the partnership. This income needs to be disclosed to SARS.

Definition of Base Cost

Base cost means the cost of an asset against which any proceeds (the price) upon disposal (sale) are compared in order to determine whether a capital gain (a profit) or loss has been realised.

Base cost includes those costs actually incurred in acquiring, enhancing or disposing of a capital asset that are not allowable as a deduction from income.

The following are included in the base cost of an asset: Acquisition cost, Incidental costs of acquisition and disposal, Capital costs of maintaining title or right to an asset and/or Cost of improvements or enhancements. See the SARS definition for more detail.

Definition of Source Code

A source code is a four digit identifier / number that SARS uses to capture information on the income tax return. It will usually appear alongside the amount it relates to. Source codes that might appear on your IRP5 are listed below. For business source codes please click here.

3605 - Annual payment
3611 - Purchased annuity
3615 - Director's remuneration
3701 - Travel allowance
3704 - Subsistence local
3713 - Other allowances
3717 - BBEE share plan
3802 - Use of car
3901 - Gratuities
3908 - Surplus apportionments
3920 - Lump sum benefit
4002 - Arrear pension
4006 - Current RAF
4024 - Other medical costs
4474 - Employer medical aid
3601 - Income or salary
3606 - Commission
3613 - Restraint of trade
3616 - Independent contractors
3702 - Reimbursive travel>8000km
3707 - Share options
3714 - Non-taxable allowances
3718 - Vesting instruments
3810 - Medical aid
3906 - Special lump sums
3909 - Unclaimed benefits
3921 - Living annuity, s15C
4003 - Provident fund
4007 - Arrear RAF
4026 - NSF pension
4493 - No 7th schedule medical
3602 - Non-taxable income
3608 - Arbitration award
3614 - Other retirement lump sums
3617 - Labour brokers
3703 - Reimbursive travel<8000km
3708 - Public office
3715 - Subsistence foreign
3801 - General benefits
3813 - Other medical costs
3907 - Other lump sums
3915 - Retirement lump sum
4001 - Current pension
4005 - Medical aid
4018 - Income protection
4030 - Donations

Definition of Public Office

  1. the President, Deputy President, a Minister, Deputy Minister, a member of the National Assembly, a permanent delegate to the National Council of Provinces, a Premier, a member of an Executive Council or a member of a provincial legislature;
  2. any member of a municipal council, a traditional leader, a member of a provincial House of Traditional Leaders and a member of the Council of Traditional Leaders; and
  3. a person occupying the office of president, chairman or chief executive officer of any non-profitmaking organization which is organized on a national or regional basis to represent persons with common interests and the funds of which are derived wholly or mainly from subscriptions of members or donations from the general public.

Definition of Primary Residence

A primary residence is the place that the taxpayer lives in for most of the year either alone or with their family.

  1. in which a natural person or a special trust holds an interest; and
  2. which that person or a beneficiary of that special trust or a spouse of that person or beneficiary -
    1. ordinarily resides or resided in as his or her main residence; and
    2. uses or used mainly for domestic purposes;

Definition of Tax Year

For an individual, the tax year runs from 1 March until 28/29 February of the following year.

Definition of Tax Season

Tax season is the period in which taxpayers must file their tax returns. The South African Revenue Service begins tax season for individuals on the 1 July each year with tax season usually closing the last Friday of November of the same year.

Definition of Income

In a general sense income is the earning or receiving of money or a similar benefit during the tax year. For tax purposes the following definition is applicable -

means the amount remaining of the gross income of any person for any year or period of assessment after deducting therefrom any amounts exempt from normal tax under Part I of Chapter II;

What is a Medical Tax credit?

The medical tax credit, brought in from the 2013 tax year provides for a monthly credit against your tax owing to SARS. If you and/or your dependents belong to a medical aid then you will receive a R242 medical tax credit per month for the first two members and a further R162 per month for every other member or dependent on the same policy. The credit will be deducted automatically off your tax payable. This is different to the previous system where medical aid contributions were deducted against income.

What is S10(1)(o)(ii) income?

Any income earned as a result of working outside of SA for longer than 183 days in a single calendar year is exempt from tax for the period worked outside the country. However for this to apply, at least 60 of those days must have been continuous (no trips home), and you must have been employed under an employment contract.

List of business source codes

Your business activity can be described by a particular source code. To find the relevant code, please select your business sector below and choose the appropriate source code for whether your business made a profit or loss (different codes).

Please select

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