South Africa Income Tax Brackets

The South African income tax guide is a significant guide that helps clarify and demystify myths around taxation. With the right resources and knowledge of taxation, paying taxes without too many restrictions is possible. It starts by understanding the taxation guidelines and tax laws. This article explores everything you need to know about taxation in South Africa. You will appreciate all significant taxes, levies, and duties details.

Income Tax for Individuals and Trusts

There are specific taxes charged on individual and trust incomes. Note that the cash value hee is given in Rands(R). Keep reading to find out more. 

Taxable Income vs. Rate of Tax

• 1 to 226 000  –  18% of taxable income
• 226 001 to 353 100 – 40 680 + 26% of taxable income above 226 000
• 353 101 to 488 700 – 73 726 + 31% of taxable income above 353 100
• 488 701 to 641 400 – 115 762 + 36% of taxable income above 488 700 
• 641 401 to 817 600 – 170 734 + 39% of taxable income above 641 400 
• 817 601 to 1 731 600 – 239 452 + 41% of taxable income above 817 600
• 1 731 601 and above – 614 192 + 45% of taxable income above 1 731 600 

Trusts That Are Different From Special Trusts: Rate Of Tax 45%

Rebates 

• Primary  –  R16 425 
• Secondary ( for Persons 65 and older) – R9 000 
• Tertiary (for Persons 75 and older) – R2 997 

Age vs. Tax Threshold 

• Below age 65  – R91 250 
• Age 65 to below – 75 R141 250
• Age 75 and over – R157 900

Understanding Provisional Tax

Provisional taxpayers are people who earn income through remuneration from unregistered employers. It can also be income in other forms than remuneration, such as an advance payable by a principal. 

Usually, individuals do not have to pay provisional tax if they don’t have a business. The individual taxable income:

• Does not exceed the tax threshold for the tax year
• Earned from foreign dividends, intestines, dividends, rental income on fixed property, and remuneration from unassigned employers remains R30,000 or lower for a tax year.

Usually, provisional tax returns showing the estimation of one’s total taxable income from an assessment year are needed from provisional taxpayers. Not that this does not apply to deceased estates as they are not classified as provisional taxpayers.

Withdrawal Benefits from Retirement Fund Lump Sum

Taxable income Amounts Vs. Tax Rate (all amounts are in Rands)

• 1 to 25,000 –   0% taxable income
• 25 001 to 660 000 – 18% of taxable income exceeding 25 000
• 660 001 to 990 000 – 114 300 + 27% of taxable income above 660 000
• 990 001 and above – 203 400 + 36% of taxable income above 990 000

The retirement fund lump sum withdrawal gains/ benefits will often consist of several things, namely:

• Pension preservation
• Pension
• Provident preservation
• Provident or
• Retirement annuity funds on withdrawal will often encompass assignments regarding the divorce order.

The tax applied on certain retirement fund lump sum withdrawal benefits (which is a lump sum of X) is often equated to the:

• Tax determined by application of tax table to the aggregate lump sum of X and all other retirement lump sum withdrawal benefits that have accrued since 2009. It also covers all retirement fund lump sum benefits from 2007 (October). Finally, it also covers all the severance benefits that accrued from March 2011, Less (minus)
• The tax determined by application of the tax table to the aggregate of all/total retirement fund lump sum withdrawal benefits that accrued before lump sum X from 2009 (March), as well as all retirement fund lump sum benefits accrued from 2007 (October), and the total severance benefits accruing from March 2011.

Retirement Fund Lump Sum Benefits/ Severance Benefits

Taxable Income Vs. Rate of Taxation (Values are given in R)

• 1 to 500 000 – 0% of taxable income
• 500 001 to 700 000 – 18% of taxable income above 500 000
• 700 001 to 1 050 000 – 36 000 + 27% of taxable income above 700 000
• 1 050 001 and above – 130 500 + 36% of taxable income above 1 050 000

The retirement fund lump sum benefits usually consist of pension and pension preservation, provident and provident preservation, a retirement annuity availed at death, a retirement/termination of employment upon attaining 55 years or due to accidents, sickness, incapacitation, injury, termination of employer’s trade, or redundancy.

The severance benefits often consist of lump sums, or they can be by an arrangement made with an employer due to relinquishing, loss, termination, pension variation/ cancellation based on the employment office, or repudiation.

The tax on specific retirement fund lump sum/ severance benefits (Often represented as the lump sum or severance benefit of Y) is often equated to:

• Tax determined by application of tax table to the aggregate of Y in addition to all retirement lump sum benefits accruing from October of 2007, as well as all retirement fund lump sum withdrawal benefits accruing from March of 2009, and all severance benefits accruing from March 2011; Less
• The tax determined by application of the tax table to the aggregate of all the retirement fund lump sum benefits accruing before lump sum Y as of October 2007, as well as all the retirement fund lump sum withdrawal benefits accruing from March 2009, and every severance benefit accrued before severance benefit Y as of March 2011.

Dividends – What You Must Know

Dividends received from South African companies are often exempt from income taxation. However, dividends tax at a 20% rate is often withheld by the companies paying the dividends to the recipients. On the other hand, dividends received by South African residents/ individuals residing in South AFrica from REITs/ listed and regulated property-owning companies are often subjected to income tax. Also, note that non-residents receiving similar dividends are only subjected to pay dividends tax.

Foreign Dividends 

Usually, many foreign dividends received by people from foreign companies/ whose shareholding is less than 10% in the foreign company will be liable to taxation at a maximum rate of 20%. There is no allowable expenditure to produce foreign dividends. 

There is a lot to learn about South African Taxation. Usually, there are guidelines stipulating tax rules on each kind of earning. It is important to know firsthand all tax requirements, exemptions, and deductions for individuals and businesses.