The ins and outs of Personal Income Tax

What is it?

Income tax is the normal tax which is paid on your taxable income. Examples of amounts an individual may receive, and from which the taxable income is determined, include:

• Remuneration (income from employment), such as, salaries, wages, bonuses, overtime pay, taxable (fringe) benefits, allowances and certain lump sum benefits.

• Profits or losses from a business or trade

• Income or profits arising from an individual being a beneficiary of a trust.

• Director’s fees

• Investment income, such as interest and foreign dividends.

• Rental income or losses

• Income from royalties

• Annuities

• Pension income

• Certain capital gains

Who is it for?

For the 2023 year of assessment (1 March 2022 – 28 February 2023) you are liable to pay income tax if you earn:

• R91 250 if you are younger than 65 years.

• If you are 65 years of age to below 75 years, the tax threshold (i.e. the amount above which income tax becomes payable) is R141 250.

• For taxpayers aged 75 years and older, this threshold is R157 900.

You do not need to submit a return if ALL the criteria below apply to you:

• Your total employment income / salary for the year (March 2022 to February 2023) before tax (gross income) was not more than R500 000; and

• You only received employment income / salary for the full year of assessment (March 2022 to February 2023) from one employer; and

• You have no car allowance/company car/ travel allowance or other income (e.g. interest or rental income); and

• You are not claiming tax related deductions/rebates (e.g. medical expenses, retirement annuity contributions other than pension contributions made by your employer, travel).

What steps must I take to ensure compliance?

STEP ONE: You must register for income tax.

If you earn a taxable income which is above the tax threshold (see above), you must register as a taxpayer with SARS. To register for income tax, you must complete an IT77 registration form which can be obtained from the SARS website (www.sars.gov.za). The form can also be requested from any SARS branch or the SARS Contact Centre. Once it has been completed, it can be taken to any SARS branch for processing, or the form can be posted to SARS. To find your nearest branch visit their branch locator.

STEP TWO: You must submit a return.

If you are registered for income tax, you will be required to submit an annual income tax return to SARS. Every year, SARS announces its Tax Season, a period during which you are required to submit your annual income tax return.

When should it be submitted?

The deadline for all taxpayers will be published once this has been made available in the Government Gazette. If you don’t submit your income tax return on time, you may be liable for penalties.

TOP TIP: When completing your return, you will require the following documentation to verify the existing, pre-populated information that appears in the return, as well as to complete any remaining portions:

• IRP5: This is the employees’ tax certificate your employer issues to you.

• Certificates you received for local interest income earned.

• Any other documentation relating to income received or accrued, such as remuneration that has not been reported to SARS by your employer, or business or investment income, etc.

• Details of medical expenses paid, and medical scheme contributions made.

• The relevant certificates reflecting your retirement annuity fund contributions made.

• A logbook and other documents in support of business travel expenses (if the travel allowance is part of your remuneration or if you have the right of use of a company car taxable benefit).

• Any other documentation relating to the allowable deductions you wish to claim.

Chat to us!