Tax In South Africa

A Contractor's Guide to Taxes : 

One of the most consistently challenging aspects of contracting in South Africa is complying with the country’s tax system. As well as paying tax in South Africa, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge. 

How do I calculate my taxable income: 

If you’re working in South Africa under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in South Africa for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in South Africa, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in South Africa through PAYE is left with the prospect of doing everything themselves.

Do you know much about South African Tax Law? Does South Africa have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in South Africa can range from 18 to 45 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Calculator: 

If you are a contractor and want a calculation on your tax and net retention in South Africa, we can supply it to you free of charge. 

Using an Umbrella Company for Income Tax : 

Contractors in South Africa are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A South African umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in South African taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the South African tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax: 

We work with numerous umbrella companies in South Africa, many of whom are experts in tax and immigration laws. If you have any questions about tax in South Africa, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their South African work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in South Africa but without the overhead of directly dealing with the South African tax authorities. Get in touch with us today for some reliable advice on tax in South Africa!

 

When Do You Need to Lodge Your Tax Return?: 
Each year, SARS will notify individuals of the period in which tax returns can be filed. This usually runs between July and November each year.
Tax Filing Deadline : 
Usually the end of November.
Can you file it online? : 
Yes, you can file your tax return via e-filing here.
Currency: 
South African Rand (ZAR)
Tax-free Threshold in: 
None
Grossed Income: 
0 to 189,880
Tax Rate: 
18%
Grossed Income: 
189,881 to 296,540
Tax Rate: 
26%
Grossed Income: 
296,541 to 410,460
Tax Rate: 
31%
Grossed Income: 
410,461 to 555,600
Tax Rate: 
36%
Grossed Income: 
555,601 to 708,310
Tax Rate: 
39%
Grossed Income: 
708,311 to 1,500,000
Tax Rate: 
41%
Grossed Income: 
1,500,001 and above
Tax Rate: 
45%
How long does it take to set up: 
45 days
How much does it cost: 
ZAR 175
Is it easy? : 
Starting a Business Rank: 136 (Source: World Bank)
How to File Taxes in: 

There are multiple ways to file your income tax in South Africa. This includes:

  • E-filing on your computer
  • Filing electronically at a SARS branch
  • Requesting a return to be posted to you and completing your return manually and posting it to SARS.

The easiest way to file your tax is via the E-filing system. To use E-filing, the following steps should be followed:

Step 1: Register for a SARS e-filing account as an individual here. Have the following information at hand:

  • Your tax registration number
  • Your ID number
  • Your general personal details.

Step 2: Login using your username and password.  

Step 3: On the left-side menu, click ‘returns issued’ and then click ‘personal income tax (ITR12)’.

Step 4: File form ITR12 by declaring any income that you have and any tax-deductible expenses that you have incurred over the tax year. When completing your return, have the following supporting documents at hand:

  • Your IRP5/IT3(a) certificate(s) which you will receive from your employer
  • Medical certificates and documents required for amounts claimed in addition to those covered by your medical aid.
  • Pension and retirement annuity certificates
  • Your banking details
  • Travel logbook (if you receive a travel allowance)
  • Tax certificates that you received in respect of investment income (IT3(b))
  • Completed confirmation of diagnosis of disability (ITR-DD), where applicable
  • Information relating to capital gain transactions, if applicable
  • Other documents relating to income you received or deductions you want to claim.

Step 5: After you have completed the form, review your information and click ‘File Return’.

Step 6: If you have any tax due, the deadline to pay is usually the end of March of the following year. The following methods may be used to pay your tax:

  • E-Filing
  • Electronic payments (ETF)
  • Payments at bank: ABSA, Albaraka Bank Limited, Bank of Athens, Capitec, FNB, Habib Bank Zurich (HBZ), HSBC, Nedbank, Mercantile or Standard Bank branch.

Government resources:

Notes: 

The above progressive rates apply to both residents and non-residents.

Does the 183 day rule apply in: 

No.

When do you become a tax resident in: 

You can become a resident for tax purposes under an ordinary residence rule or under a physical presence rule.

Under an ordinary residence rule, an individual is regarded as a resident if South Africa is the place, considering all financial and personal circumstances, to which the individual would return from their travels, and that is the individual’s real home.

Under the physical presence rule, if the individual is not an ordinary resident during a particular year, but they have been physically present in South Africa for more than 91 days in the tax year, and on aggregate more than 915 days in the 5 preceding tax years, they will be classified as a resident for tax purposes.

Am I taxed on my global income in: 

Yes, if you are a resident.

Non-residents are subject to tax on income from a South African source only.

Client comment

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