All residents living and working in South Africa are typically liable to pay income tax in South Africa, although how much you pay depends on your tax residency status and how much you have earned.
We cover the main aspects of individual income tax in South Africa, with sections including:
- Income tax in South Africa
- Earnings subject to income tax in South Africa
- How to file your tax return in South Africa
- Income tax rates in South Africa
- Calculating income tax
- Income tax in South Africa for expats
- Tax refunds in South Africa
- Fines in South Africa
- Income tax advice in South Africa
- Useful resources
Income tax in South Africa
The income tax system in South Africa
South African income tax is levied on residents’ worldwide income, with appropriate relief to avoid double taxation for certain foreigners, plus exemptions and allowable deductions. Since March 2020, tax residents who earn more than R1.25 million per year in foreign employment income have been taxed in South Africa. The normal tax tables for that particular year of assessment will be applied. For non-residents, taxes generally only apply to the South African income that they earn.
The South African Revenue Service (SARS) collects income tax in South Africa. This revenue partly contributes to public goods such as public healthcare. In most cases, though, people pay taxes through the Pay As You Earn (PAYE) system. Under this system, taxes are withheld through your monthly salary payments and reconciled at the end of the tax year.
Taxpayers who receive income beyond a monthly salary may also be liable to pay provisional taxes.
Who pays income tax in South Africa?
South Africa operates on a residency-based taxation system, meaning that residents are taxed on worldwide income and non-residents are taxed on South African-sourced income. Residents are those with South African citizenship or residence permits, but you are also considered a resident for tax purposes if you:
- have been living in South Africa for more than 91 days in total in each of the last five tax years
- have lived at least 915 days in total in South Africa across those five years
SARS collects tax in South Africa. Working residents must obtain an income tax number and submit an annual South African tax return.
Who is exempt from income tax in South Africa?
Generally, if you earn under a certain amount, you don’t have to pay income tax. Additionally, you don’t need to file a return if all of the following are true:
- Your total employment income for the year, before tax, was less than R500,000
- Your employment income was from only one employer for the full tax year
- You have no other form of income (e.g., rental income, another job, car allowance)
- You aren’t claiming any other tax deductions, like medical or travel expenses
If you meet all of the criteria above, you don’t need to submit a tax return. If you’re still unsure, check on the SARS website.
Earnings subject to income tax in South Africa
Taxes on income and salary in South Africa
Income tax in South Africa includes individual and business income tax. You can also learn more about business or corporate income tax in South Africa in our guide to corporate tax in South Africa.
SARS income tax applies to the following type of earnings:
- employment income including salaries, bonuses, overtime, and taxable benefits and allowances (in most cases deducted from wage payments by employers through a pay-as-you-earn or PAYE scheme)
- 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
There is also an additional dividends tax in South Africa imposed on dividends payments to shareholders at the rate of 20%. This is a separate tax that is withheld from the dividend payment by the company making the payment.
Taxes on savings and investments
As an individual taxpayer, any interest you earn on bonds or savings will be taxed. However, there is an annual allowance that isn’t taxed – you only pay tax on interest accrued beyond this amount. In 2023, the allowance is R23,800 and R34,500 if you’re 65 and older.
Taxes on rental income
If you receive income from a rental property, you should declare this on your income tax. Though taxes apply to this income, be sure to declare your expenses; taxpayers can deduct certain expenses such as agent fees, some insurance, and advertising. You can also check out the SARS website for more information.
How to file your tax return in South Africa
If you work in South Africa, your employer deducts your SARS income tax contributions from your salary, but you will still need to complete an annual South African income tax return.
You must register as a South African taxpayer and have a SARS income tax number. Your employer typically does this; otherwise, read how to join South African social security.
Once you have your SARS income tax number, you can complete your tax return on paper or online. You can obtain a paper copy of the form from your local SARS office. To complete a South African tax return online, you must also register for eFiling.
Provisional tax return
If you receive an income other than an employment salary, you are liable to pay their tax via the South African provisional tax system. This is done in order to spread the tax liability across the year. You will pay two upfront instalments during the year, based on estimated taxable income. The final balance owed will then be submitted along with the tax return form.
Income tax deadlines in South Africa
The current South African tax year runs from 1 March 2023 to 29 February 2024. The tax season, when people are required to file their income tax returns, is typically July to November, depending on the method of tax filing. Check the SARS website for the most up-to-date tax deadlines.
Income tax forms in South Africa
The South African income tax return for individuals is called form ITR12. To complete the form, you need:
- your bank statements
- information on all forms of income and allowances/deductions you are including in the form
- your tax number
- your employee tax certificate (IRP5/IT3a), if applicable
- certificates (IT3b) for any investment income
- medical aid certificate for details of contributions made that do not appear on your IRP5/IT3a certificate
Information on the filing season and how to file your income taxes can be found on the SARS website.
Income tax rates in South Africa
Income tax brackets in South Africa are progressive. Therefore, you pay a higher income tax rate the more you earn. The income tax brackets in South Africa for the 2022 tax year (1 March 2022 to 28 February 2023) are as follows:
|Rates of tax
|Up to R226,000
|18% of taxable income
|R40,680 + 26% of taxable income above R226,000
|R73,726 + 31% of taxable income above R353,100
|R115,762 + 36% of taxable income above R488,700
|R170,734 + 39% of taxable income above R641,401
|R239,452 + 41% of taxable income above R817,600
|R1,731,601 and above
|R614,192 + 45% of taxable income above R1,731,600
The 2023 tax year has the following brackets and rates:
|Taxable income (R)
|Rates of tax (R)
|Up to R237,100
|18% of taxable income
|R42,678 + 26% of taxable income above R237,100
|R77,362 + 31% of taxable income above R370,500
|R121,475 + 36% of taxable income above R512,800
|R179,147 + 39% of taxable income above R673,000
|R251,258 + 41% of taxable income above R857,900
|R1,817,001 and above
|R644,489 + 45% of taxable income above R1,817,000
There are different income thresholds for certain age groups, up to which earnings are exempt from SARS income tax. For 2022 (PDF), these were:
- R91,250: for under-65s
- R141,250: for ages 65–74
- R157,900: for over-75s.
In 2023 (PDF), they are the following:
- R95,750: for under-65s
- R148,217: for ages 65–74
- R165,689: for over-75s
Personal tax allowance and deductions in South Africa
Certain forms of income are exempt from tax in South Africa. These are set out in Section 10 of the 1962 Income Tax Act South Africa. Tax residents can make the following deductions from their taxable income in South Africa for the 2023 tax year:
- Tax threshold allowance of R95,750 (R148,217 for those aged 65–74 and R165,689 for those aged 75 and over)
- Medical tax credit of R364 per month (plus R364 per month for the first dependent and R246 per month for each additional dependent)
- Exemption on interest payments up to R23,800 (R34,500 for those aged 65 and over)
- Tax relief on retirement lump sum benefits up to a total of R500,000 across a lifetime
- Tax relief claims against work-related travel and vehicle allowance
- A tax-free allowance for settling in costs up to one month’s basic salary for relocation costs may be provided in some cases where an employee and their family are relocated to South Africa for employment purposes
Self-employed income tax allowances in South Africa
Self-employed people are subject to income tax at the same levels as employees but there are a few deductions you may be able to claim, for example, certain home office expenses.
For information that’s more specific to your work and financial situation, you should hire a tax specialist.
Calculating income tax
Using an income tax calculator will help you calculate the amount of South African income tax you have to pay. In fact, there are a number of income tax calculators online, including those from:
In place of using a SARS income tax calculator, you can also work it out using the following simple steps:
- Determine gross income: calculate all forms of taxable income and any employment-related benefits and allowances (worldwide income for South African tax residents, or income earned inside South Africa only for non-residents).
- Deduct any forms of exempt income as detailed in Section 10 of the 1962 Income Tax Act South Africa.
- Deduct all allowances and deductions to calculate you your taxable income.
- Multiply your taxable income by your tax rate, depending on your tax bracket.
- Subtract any rebates owed: the annual rebate plus any rebates from over-payments in past years, or applicable rebates for foreign taxes allowed by double-taxation agreements
Once your ITR12 has been assessed by SARS, you will receive a Notice of Assessment (ITA34) that will detail any outstanding tax that needs to be paid. A guide on how to complete your ITR12 form can also be found on the SARS website (PDF).
Income tax in South Africa for expats
Foreign residents pay the same income tax in South Africa as local citizens. However, taxes for non-resident taxpayers only apply to income from South Africa and not worldwide.
South Africa has tax treaties with Australia, Japan, Sweden, Thailand, the United Kingdom, and the United States, amongst others. These have been set up to help ensure that individuals moving from one country to another don’t have to pay double taxation on income earned in their home country.
From 1 March 2020, foreign employment income earned by a tax resident in excess of R1.25 million has been taxed in South Africa according to the tax tables for that year. This applies to residents who spend more than 183 days, of which at least 60 days is continuous, outside of South Africa in any 12 month period during that year of assessment.
Tax on pensions
For both South African residents and non-residents, there is no tax on overseas pensions in South Africa. However, those retiring in South Africa who are receiving a South African pension will be liable to pay tax on annual earnings above R128,650, and at least the minimum 18% tax on lump-sum payments above R500,000.
More information about taxes and retirement in South Africa is available from the South African Revenue Service.
Filing US taxes from South Africa
Every US citizen and green card holder is required to file a tax return with the IRS even when living abroad. Many are unaware of these obligations, thinking that as an expat they do not need to pay or file tax returns in the US. You do!
For more information and help filing your US tax returns from South Africa, see our guide to filing US taxes from abroad.
Tax refunds in South Africa
Because of the PAYE system in place throughout South Africa, it’s not as common as in other places to receive a bulky tax refund annually. Instead, what usually happens is that your income tax is withheld with every paycheck and at the end of the year, when the amounts are reconciled, if you have overpaid or underpaid, you’ll deal with it then.
If you are not happy with the income tax assessment made by SARS, you can appeal the decision by filing a dispute. Details on how to appeal a decision is available from the South African Revenue Service.
Fines in South Africa
Not filing your tax return can result in a penalty ranging from R250 to R16,000 for each month that you don’t comply. Furthermore, a law passed in 2021 makes taxpayers liable for a criminal offense if they are non-compliant as a result of the taxpayer’s negligence. The penalty could be a jail sentence of up to two years.
For the most up to date information about tax return penalties, check out the SARS website.
Income tax advice in South Africa
As someone living and earning in a country that’s not home, it’s very important to seek expert advice for many different facets of your new life, but especially when it comes to your taxes.
There is simply too much room for error for you to go it alone, especially if you are in a complicated situation, self-employed, or a property owner. Get appropriate financial advice to avoid potential future problems.
- South African Revenue Service (SARS)
- SARS income tax tool
- Tax deductions in South Africa
- SARS holds free tax workshops at most of their branches between January and March, where you can see advice on filing your South African income tax return.
- UK government guide on South African income tax for expats.