As the youth of South Africa start their careers with their first jobs, they are also faced with having to pay income tax.
There are quite a lot of requirements that must be complied with, however, the general rule is that everyone earning an income must pay tax.
The following principles are quite important to keep in mind when establishing whether income tax must be paid or not:
All income of an individual is considered, including but not limited to, salaries and interest earned on investment.
Under South African law, the worldwide income of an individual is considered. This means that in today's time and age where it is possible to earn an income in a foreign currency while staying in South Africa, it will still be considered as an income for South African income tax purposes.
There are also certain exemptions that may apply depending on the annual income of an individual. For example, during the 1 March 2022 to 28 February 2023 assessment period, a person younger than 65 years of age and who earned less than R91,250 for the assessment period does not have to pay income tax.
Not all taxpayers need to submit an income tax return, even though s/he does have to pay income tax. For example, a taxpayer's employer can deduct income tax (Pay As You Earn – PAYE) from his/her salary on a monthly basis to pay over to South African Revenue Service (“SARS”). If this is the case and the taxpayer's annual income is less than R500,000 from a single employer, it might not be necessary to submit a tax return.
A tax return is a form that must be completed and submitted to SARS in order to calculate the amount of income tax that must be paid or refunded.
Be careful and get advice! The consequences of not complying with tax related laws and procedures can have severe consequences. Be very careful not to just assume that you do not have to submit a tax return or that you are exempt from paying income tax. No matter what your circumstances and annual income, always get advice and clarity.
Visit the SARS Website at www.sars.gov.za for more information.