What is Taxable Income in South Africa?
Tax & Compliance
Explained Simply
Taxable income is calculated as: Gross Income - Exempt Income - Allowable Deductions = Taxable Income. Allowable deductions include retirement fund contributions (up to 27.5%), travel expenses, home office expenses, and wear and tear on business assets. Certain income is exempt, such as the first R23,800 of local interest (under 65) and up to R1.25 million of foreign employment income. The taxable income figure determines which tax bracket you fall into.
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Related Terms
- 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.
- PAYE (Pay As You Earn)PAYE is the system through which employers deduct income tax from employees' salaries and pay it directly to SARS on their behalf each month.
- Provisional TaxProvisional tax is a method of paying income tax in advance, in two or three instalments during the tax year, rather than as a lump sum at year-end.
- Gross SalaryGross salary is the total amount an employer pays an employee before any deductions such as PAYE tax, UIF contributions, pension fund contributions, or medical aid.