August 29 2019
The South African Revenue Service (SARS) is responsible for the collection of taxes within the Republic of South Africa. Its main functions are to:
- Collect and administer all national taxes, duties and levies;
- Collect revenue that may be imposed under any other legislation, as agreed on between SARS and an organ of state or institution entitled to the revenue;
- Provide protection against the illegal importation and exportation of goods;
- Facilitate trade
- Advise the Minister of Finance on all revenue matters.
Any person who receives an income within South Africa has to be registered for tax purposes and if any employees of a company doing business within South Africa are registered for tax purposes with SARS, the company must register as an employer with SARS. Furthermore, any tax-registered company has to register its employees with SARS, irrespective of their tax status.
The South African tax year runs from 1 March to 28/29 February. The tax season, when people are required to submit their tax return forms, is from July to November.
Residents who pay taxes in South Africa have to fill in an annual tax return form and submit to SARS. The only exemptions from this are those earning under R350,000 gross salary from a single employer, with no additional sources of income and no deductions they want to claim.
Taxpayers, both individuals and businesses, are required to make the necessary payments along with their South African tax return. This will be any amount owed that hasn’t been paid through the Pay-as-You-Earn (PAYE) system, where your tax contributions are automatically deducted from your wages.
If you have to pay more taxes to pay, payments can be made to SARS using any of the following methods:
- at a bank
- via a SARS eFiling; or
- via an electronic funds transfer.
Individual income tax
Individual income tax (otherwise known as Personal income tax) rates in South Africa range from 18% to 45% although the tax threshold of R78 150 (for persons below age 65) means that anyone earning less than this amount pays no income tax. Individuals earning less than R78 150 (2018) a year do not need to declare their income and do not need to submit an income tax return so long as their remuneration is from a single employer, their remuneration is for the full tax year and no allowance was paid, from which PAYE was not deducted in full with regards to travel allowance.
Income tax in South Africa is payable on any earnings received from the following sources:
- employment income including salaries, bonuses, overtime and taxable benefits and allowances (in most cases, deducted from wage payments by employers through PAYE);
- profits or losses from a business or self-employed trade;
- director’s fees;
- rental income;
- investment income such as interest or dividends;
- pension income (excluding foreign pensions);
- certain capital gains.
More information on individual tax can be found here
Corporate income tax
The company income tax rate is levied at 28% of the taxable income of the company. This was not changed in the 2018/19 Budget.
Corporate tax in South Africa, also known as business tax, is a tax payable on business income for all businesses and companies registered in South Africa. This includes:
- listed and unlisted public companies;
- private companies;
- close corporations;
- collective investment schemes;
- small businesses;
- share block companies;
- body corporates;
- public benefit companies;
- dormant companies.
Offences under the tax act
A person commits an offence if they fail to:
- submit a tax return or document to SARS; or
- fail to issue a document to a person as needed; or
- fail to register or amend a registration in the instance where registered details have changed; or
- keep records as needed by SARS; or
knowingly submit a false tax certificate or statement; or
- refuse or neglect to take an oath or make a solemn declaration.
A person convicted of these offences may be liable to a fine or imprisonment not exceeding two years.
Citations & references:
This article is for information purposes only and you are advised to seek professional advice from your own accountant as your individual situation will vary.