Everybody in South Africa is subject to income tax. Until 2001, South Africa ran on a source-based tax system, which meant that tax was only payable on income from a South African source. Nowadays, residents are taxed on their ‘worldwide’ incomes, a term inclusive of income from foreign countries or foreign-controlled companies.
Resident Tests
Whether you’re a resident for tax purposes is not determined by whether or not you’ve received a resident permit from home affairs. There are two tests SARS uses to establish whether you’re a taxable resident.
The Ordinarily Resident Test
This is the primary way people are evaluated for resident status. You’re considered to be ordinarily resident if your home, the place to which you constantly return and at which your belongings are stored, is in the country. The definition seems to be quite subjective (even wishy-washy) and will probably be based primarily on human judgment rather than the results of a block-ticking legal check sheet.
The Physical Presence Test
Failing the Ordinarily Resident Test, the Physical Presence Test may be applied. Under the terms of this test, a non-citizen becomes a South African resident only when that person has been present in the country for a minimum of:
- 91 days overall during the present year
- 91 days overall for each year preceding the present one
- 549 days overall for the last three years
Tax for Non-Residents
Non-residents are only taxed on their South African incomes. As per international agreement, this is income accrued by virtue of services rendered within the country, regardless of where the original work contract was signed or to where the money is paid. Non-residents are taxed at the same rate as residents.
Double Taxation
A non-resident’s tax position may be affected by agreements for the avoidance of double taxation. At present, South Africa has concluded double taxation agreements with all the countries listed below, and has agreements pending with numerous others. For the full details, visit: http://www.sars.gov.za/
- Algeria
- Australia
- Austria
- Belgium
- Botswana
- Brazil
- Bulgaria
- Canada
- China
- Croatia
- Cyprus
- Czech Republic
- Denmark
- Egypt
- Ethiopia
- Finland
- France
- Ghana
- Germany
- Greece
- Hungary
- India
- Indonesia
- Iran
- Ireland
- Israil
- Italy
- Japan
- Korea
- Kuwait
- Lesotho
- Luxembourg
- Malawi
- Malaysia
- Malta
- Mauritius
- Mozambique
- Namibia
- Netherlands
- New Zealand
- Nigeria
- Norway
- Oman
- Pakistan
- Poland
- Portugal
- Taiwan
- Romania
- Russian Federation
- Saudi Arabia
- Seychelles
- Singapore
- Slovak Republic
- Spain
- Swaziland
- Sweden
- Switzerland
- Tanzani
- Thailand
- Tunisia
- Turkey
- Uganda
- Ukraine
- United Kingdom
- United States of America
- Zambia
- Zimbabwe
Tax Calendar
The South African tax year runs from the 1st of April to the 31st of March.
For companies, close corporations (CCs) and individuals classified as provisional tax-payers (such as CC members and company directors) tax is payable in monthly installments.
Individuals are required to make two payments, which are calculated by their estimated tax liability based on their payments in the previous year. The first is due 6 months after the beginning of the tax year (by the 31st of August) and the second by its conclusion (on the 31st of March). These payments can be made in cash at any branch of SARS. The Cape Town branch is situated at 17 Long Street, CBD, and is open from 08:00-16:00 on weekdays, excluding Wednesday, when the office opens an hour later. Call 021 413 8905.
You can also submit your tax payments electronically. Visit http://www.sarsefiling.co.za
Late payment of taxes brings on a penalty, interest on which is also payable.
If the amount you paid is less than the amount due, a payment for the balance must be tendered by the end of the following September (i.e. within 7 months). Interest on the shortfall, currently set at 11.5 per cent, will also be payable.
If, on the other hand, the amount you paid turns out to be greater than the amount due, the excess will be refunded with interest calculated at a rate of 7.5 per cent (interest that is, amusingly, also taxable).
Employees who earn R112500 a year or less are not required to register for tax, though they are liable to pay it. Most employees pay their tax through their employer, thus becoming, in essence, the tax liability of the employer. Employers simply deduct the amount that would be taxed from a registered individual from their employees’ salaries every month, and pay this to SARS.
Employees earning over R112500 who are registered for tax pay their tax in the same way, but are required to file an income tax return at the end of every tax year. The necessary forms, along with the guidelines for completing tax returns, are sent to all registered tax-payers before the end of each year. Employees who are tax registered must be issued with a completed IRP5 form by their employer, which details all the monthly payments made to SARS on behalf of the employee by the employer over the course of the year (visit http://www.sars.gov.za/ for more information). The employee will then be required to attach the IRP5 to their completed forms, and submit them to their nearest SARS office.
This can also be done electronically at http://www.sarsefiling.co.za
Income Tax Rates
As of 2009, the average rate of income tax for both residents and non-residents is 28%.
Current bracket-specific rates are as follows:
Taxable Income / Tax Rate
- 1-112500 18 %
- 112 501 – 195 000 / 21960 + 25% of the amount above 11250
- 195 001 – 270 000 / 40210 + 30% of the amount above 195 000
- 270 001 – 380 000 / 62 710 + 35% of the amount above 270 000
- 380 001 – 490 000 / 101210 + 38% of the amount above 380 000
- 490 001 and above / 143 010 + 40% of the amount above 490 000
Rebates
A primary rebate of R8280 is available to all individuals for the tax year ending in February 2005, and a secondary rebate of R5040 is available to those over 65.
