What is Income? Definition and SA Tax Meaning
Accounting Basics
Explained Simply
In everyday use, income covers your salary, business profits, rent, interest and dividends. In South African tax law the word is more specific: the Income Tax Act defines income as gross income less exempt income, and taxable income is income less allowable deductions. That is why a person can earn money that is not taxed, such as an amount covered by an exemption. In accounting, income is also used for revenue and gains reported on the income statement. When you read a SARS form or guide, check which of these meanings is intended.
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Related Terms
- Gross IncomeGross income is, for a South African resident, the total amount in cash or otherwise received by or accrued to that person during the year of assessment, excluding receipts or accruals of a capital nature, as defined in section 1 of the Income Tax Act.
- Taxable IncomeTaxable income is the portion of total income on which income tax is calculated, after subtracting all allowable deductions and exemptions as defined by SARS.
- Income TaxIncome tax is a direct tax levied by SARS on the taxable income of individuals, companies, and trusts in South Africa, using a progressive rate system for individuals.