The South African Revenue Service’s (SARS’) 2019 tax season for non-provisional individual taxpayers officially started on 1 August 2019, with those filing via eFiling and SARS’ MobiApp being able to do so from 1 July 2019. Branch filing closes on 31 October 2019 and eFiling or MobiApp filing closes on 4 December 2019.
Most salaried taxpayers pay tax through Pay As You Earn (PAYE), which is deducted from their salary by their employer, who pays the tax over to SARS. SARS reconciles the amount of tax paid by the employer during the tax year with the taxpayer’s income tax return submitted during tax season. If too much tax was paid, the taxpayer will receive a refund. If too little tax was paid, the taxpayer will be required to pay the difference to SARS.
But not all income earners are liable to pay income tax and not all taxpayers are required to file an income tax return.
Who is liable to pay income tax?
Individuals who receive taxable income of more than a specific amount (known as the “tax threshold” amount) in a year of assessment are liable for income tax. The tax threshold amount for the 2019 year of assessment is:
- R78 150 for individuals younger than 65
- R121 000 for individuals 65 or older, but younger than 75
- R135 300 for individuals 75 or older
Who is required to file an income tax return?
South African tax residents
1. Those who do not need to file a tax return
Individuals who are South African tax residents do not have to file tax returns (even if their gross income exceeds the tax threshold at which income tax becomes payable) if their gross income consisted only of one or more of the following categories of income:
- South African interest income (not from a tax-free investment) less than
- R23 800 for individuals 65 years or younger
- R34 500 for individuals 75 years or older; and/or
- Amounts received from a tax-free investment; and/or
- Up to R500 000 of gross salary income from only one employer and the employer deducted tax.
2. Those who only need to file a tax return if their income is more than the tax threshold
Individuals who are South African tax residents must file tax returns if their income is more than the tax threshold and one of the following applies:
- The individual earned income from more than one employer or income source – they must file a return if they changed jobs during the tax year or have more than one employer or income source.
- The individual has another source of income, such as interest, rental income or extra income from a side business.
- The individual received a taxable allowance or advance from their employer (e.g. travel, subsistence, computer or cellular); or the individual had the right to use a motor vehicle supplied by their employer.
3. Those who need to file a tax return, irrespective of the amount they earned
Individuals who are South African tax residents must file a tax return (irrespective of whether the amount of income earned is less or more than the tax threshold) if:
- They carried on a business (not as an employee) in or outside of South Africa.
- SARS sent them a tax return and requested that they complete it, irrespective of the gross income they received.
- They sold assets and the capital gain or loss was more than R40 000 for the tax year.
- They owned foreign currency or foreign assets and the total value was more than R225 000 at any time during the tax year.
- They earned a foreign salary for work done as an employee outside of South Africa.
- They earned income or capital gains from foreign currency or assets outside of South Africa that could be attributed to them as a result of making a donation, settlement or other disposition.
1. Those who do not need to file a tax return
Individuals who are not South African tax residents do not have to file a tax return if they received dividends from a South African source and were a non-resident for the duration of the 2019 tax year.
2. Those who need to file a tax return
Individuals who are not South African tax residents must file a tax return if:
- They received interest from a South African source and
- They were physically present in South Africa for longer than 183 days in total during the 12 months before the interest was received or accrued; or
- The debt from which the interest is earned is connected to their permanent establishment in South Africa; or
- They carried on a business (not as an employee) in South Africa; or
- They sold assets and made capital gains or losses from the disposal of
- South African fixed property or a right in fixed property; or
- Shares in a company or a vested interest in a trust if at least 80% of the value of the interest is in South African fixed property and they hold at least 20% of the shares or rights of the company or trust; or
- Capital assets effectively connected with their South African permanent establishment.