When you start working and earning a salary, you are most likely liable to pay tax. If you are working full-time, your company will probably pay your tax contribution on your behalf. However, if you run a side hustle, you may need to meet certain tax obligations. Retirement funds, endowments, and unit trust funds are also taxable. If you start at a new company, it is important to understand the tax implications of cashing in or moving your provident fund or retirement annuities. 

For a lot of young people, especially those who are beginning to get a handle on their finances, tax filing can be a dreaded task, and strategic tax planning and your tax obligations as a young professional may seem like a major undertaking.

When you are at the start of your career, your tax obligations are straightforward. As you move to a new firm, start an entrepreneurial side hustle or purchase a rental property, it can become more complex. There are also tax considerations on your investments.

"I’d certainly suggest if you’re earning from multiple income streams, that you start to consider structuring your income in ways that it doesn’t only come through your personal liability. Doing your homework and consulting a tax professional is essential because ultimately, you own your own destiny." - Hiten Keshave, CA(SA) and Founder of The Unconventional CA.
MORE INFORMATION

Frequently asked questions about tax in South Africa

  • What do you need for tax returns?

    Before you logon to SARS’ eFiling portal, make sure you’ve got all the documents you need to get the most of your tax return. These include:

    • Your IRP5 form
    • Logbook of your business trips if you have a travel allowance
    • Proof of medical expenses
    • Completed IT3(b) certificate (for any investments / policies)
    • Details of donations
    • Summary of any secondary income.

  • How is taxable income calculated?

    Taxable income is calculated annually by adding all your gross income streams and subtracting all tax-exempt expenses and deductions. Tax is paid on this amount according to your tax bracket.

  • What tax bracket do I fall in?

    The tax brackets for 2022 are as follows:

    ​Taxable income:

    Tax rate:

    < R226 000*

    18% of taxable income

    R226 001 – 353 100

    40 680 + 26% of taxable income

    R353 101 – 488 700

    73 726 + 31% of taxable income

    R488 701– 641 400

    115 762 + 36% of taxable income

    R641 401 – 817 600

    170 734 + 39% of taxable income

    R817 601 – 1 731 600

    239 452 + 41% of taxable income

    R1 731 601+

    614 192 + 45% of taxable income


    * Tax thresholds determine the minimum income that can be taxed.

  • What is capital gains tax?

    Capital Gains Tax is a tax on the profit received from the sale of an investment. Individuals, trusts and companies are required to pay Capital Gains Tax.

  • What percentage is capital gains tax?

    In 2022, Capital Gains Tax (CGT) is calculated as follows:

    • Individuals and special trusts: 18% of sale value
    • Companies: 22.4%
    • Other trusts: 36%

    Some assets are specifically excluded from Capital Gains Tax in certain conditions. Visit SARS’ website to find out more.

  • What about tax on second income in South Africa?

    Because taxable income includes all sources of income, your second income can expose you to higher tax rates. You should consider structuring your income streams in ways that don’t come from your personal liability, such as a registering a company.

  • What are great tax-free investments in South Africa?

    An endowment policy is a tax-smart way of investing and appreciating your capital and earning returns because they are submitted net of tax yield. A tax-free savings account provides a tax-exempt fund that can help you maximise your savings.An endowment policy is a tax-smart way of investing and appreciating your capital and earning returns because they are submitted net of tax yield. A tax-free savings account provides a tax-exempt fund that can help you maximise your savings.

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