All South African citizens are required to pay tax at some point in their working careers. Whether freelancing or an employee of a company, individuals that receive an income over a specific threshold have the responsibility to uphold tax legislation. In this article, we will outline what individual income tax is, who it applies to, how you can comply with individual income tax and how to go about submitting your individual income tax when working freelance or for an employer. With this information, you can adequately prepare for the tax year ahead and ensure that all of your ducks are in a row.

What is Individual Income Tax?

Individual income tax, or personal income tax, is a standard tax applied to your taxable income. Several types of payments and amounts affect one’s individual income tax and we have outlined some of the primary influencing factors below:

• Income from employment in the form of salaries, wages, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum benefits
• A business or trade’s profits or losses
• Profits accumulated as a result of individuals being a beneficiary of a trust
• Fees paid out to directors
• Interest or foreign dividends accumulated on investments
• Income or losses from rent
• Income from royalties
• Annuities
• Pension
• Certain capital gains

Who Does Individual Income Tax Apply To?

Certain requirements need to be met for an individual to be liable for personal income tax. This is so that persons earning under a minimum threshold are not responsible for hefty payments that would affect their livelihoods while others earning above the maximum income bracket are responsible for contributing more towards the South African Revenue Service’s (SARS) goals through taxation. But, what is the minimum earning threshold and how do rates differ the more income an individual makes?

As of the 2022 tax year (1 March 2021 to 28 February 2022), individuals earning above the thresholds mentioned below are required to pay tax:

• R87 300 for those younger than 65
• R135 150 for those over 65 years of age but younger than 75
• R151 100 for those aged 75 and older

Whatsmore, individuals that meet all of the points below are not required to pay tax:

• Your total employment income/salary for the year before tax (gross income) was not more than R500 000
• You only received employment income/salary for the full year of assessment from one employer
• You have no car allowance/company car/travel allowance or other income (e.g. interest or rental income)
• You are not claiming tax related deductions/rebates (e.g. medical expenses, retirement annuity contributions other than pension contributions made by your employer, travel)

You will be required to pay tax at some point or the other and it would be wise to get your documentation for compliance with tax legislation. Let’s take a look at how.

How to Comply with Individual Income Tax

Individuals that are required to pay tax must register for individual income tax through SARS. In most cases, registration and facilitation of documentation submission can all be done through the organisations eFiling system, meaning you can comply with tax from the comfort of your home. That said, the system can be overwhelming and many individuals have concerns regarding their income. If you wish to comply with individual income tax but are worried about the process then it would be wise to contact an expert financial advising company to help get your submissions done accurately and efficiently. 

The second step to compliance with individual income tax legislation is submitting your return. You will be required to submit an annual tax return at the end of each tax year which typically runs from the beginning of March to the end of February the following year. During the SARS announced annual tax season, you may submit your annual income tax return through the SARS eFiling system or with the assistance of a reputable financial advising company.

Your personal income tax return is unique to your specific tax situation, meaning you are generally required to submit the forms yourself. Your employer is responsible for paying employee tax based on your salary on your behalf which will be factored into your personal income tax forms. That said, you must fill out and submit your own annual returns if you are not working alongside a specialist financial advising company.

These are the basics of South African individual income tax, from its purpose to who this form of tax applies to as well as how you can comply with individual income tax.