Calculations Summary
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An income tax calculator is a tool designed to estimate the amount of income tax an individual or entity owes to the government.
It typically requires inputs like total income, deductions, and tax credits. The calculator applies current tax rates and rules to these inputs to provide an estimate of the tax liability.
This tool aids in financial planning, ensuring compliance with tax regulations, and helps in understanding the impact of various financial decisions on tax obligations.
It’s a convenient way for taxpayers to get a quick estimate of their tax dues without delving into complex tax calculations.
How to Calculate Individual Income Tax in South Africa – PAYEE
Calculating individual income tax in South Africa, specifically under the Pay-As-You-Earn (PAYE) system, involves several detailed steps.
Here’s a guide to help you understand this process:
- Determine Taxable Income:
- Start by calculating your total income. This includes your salary, bonuses, and any other income sources.
- Subtract any allowable deductions. These can include contributions to retirement funds, medical expenses, and travel allowances, among others.
- Understand Tax Brackets:
- South Africa uses a progressive tax system, where higher income levels are taxed at higher rates.
- For the 2023/24 tax year, the tax brackets are as follows:
- Up to R237,100: 18% of taxable income
- R237,101 to R370,500: 26% on income above R237,100, plus a fixed amount
- R370,501 to R512,800: 31% on income above R370,500, plus a fixed amount
- Continue this pattern for higher brackets.
- Apply Tax Rates:
- Use the tax rates corresponding to your income bracket to calculate your tax liability.
- For example, if your taxable income is R400,000, you fall into the third bracket. Your tax will be a fixed amount plus 31% of the income above R370,500.
- Account for Rebates and Thresholds:
- Deduct any applicable rebates from your calculated tax. Rebates depend on your age.
- Consider tax thresholds, which are income levels below which no tax is payable. For example, if you’re below 65 years, the threshold for the 2023/24 year is R95,750.
- Calculate PAYE:
- If you’re an employee, your employer will calculate PAYE based on your earnings and deductions each month.
- The employer withholds this tax and pays it to the South African Revenue Service (SARS) on your behalf.
- Consider Additional Taxes:
- Be aware of other taxes like dividends tax or capital gains tax that might affect your overall tax liability.
- Submit Tax Returns:
- You need to submit an annual tax return to SARS, where you declare your total income and claim deductions and rebates.
- SARS will assess your return and inform you if any additional tax is due or if you’re eligible for a refund.
- Seek Professional Advice:
- If you find the process complex, consider consulting a tax professional for personalized advice and assistance.
What you need to know about income tax
The most important aspects an individual needs to be aware of regarding individual income tax in South Africa are as follows:
Tax Rates and Brackets: Understand the progressive tax brackets and corresponding rates. For 2023/24, these range from 18% for incomes up to R237,100 to 45% for incomes above R1,817,000.
Tax Rebates: Be aware of the available rebates, such as the primary rebate of R17,235, the secondary rebate for those 65 and older at R9,444, and the tertiary rebate for those 75 and older at R3,145.
Tax Thresholds: Know the income levels below which no tax is payable. For those below 65, it’s R95,750; aged 65 to 75, it’s R148,217; and for those 75 and over, it’s R165,689.
Provisional Tax: Understand the requirements for paying provisional tax. This applies to those who earn income other than remuneration or an allowance or advance from their employer.
Retirement Fund Contributions: Contributions to pension, provident, and retirement annuity funds are deductible and subject to certain limits.
Medical and Disability Expenses: There are rebates based on monthly contributions to medical schemes and qualifying medical expenses.
Donations: Deductions for donations to qualifying public benefit organizations are limited to 10% of taxable income.
Allowances and Travel Deductions: Understand the rules for subsistence and travel allowances, especially if these are part of your remuneration.
Fringe Benefits: Be aware of the tax implications of employer-provided benefits like vehicles and accommodation.
Interest and Dividend Income: Understand the tax treatment of these types of income, including exemptions and deductions.
Capital Gains Tax: Be informed about how capital gains are taxed, including the exclusions and the effective rates.
Annual Tax Returns: Lastly, ensure timely and accurate submission of annual tax returns to SARS, declaring all income and claiming applicable deductions and rebates.
2024 tax year (1 March 2023 – 29 February 2024)
| Taxable income (R) | Rates of tax (R) |
|---|---|
| 1 – 237 100 | 18% of taxable income |
| 237 101 – 370 500 | 42 678 + 26% of taxable income above 237 100 |
| 370 501 – 512 800 | 77 362 + 31% of taxable income above 370 500 |
| 512 801 – 673 000 | 121 475 + 36% of taxable income above 512 800 |
| 673 001 – 857 900 | 179 147 + 39% of taxable income above 673 000 |
| 857 901 – 1 817 000 | 251 258 + 41% of taxable income above 857 900 |
| 1 817 001 and above | 644 489 + 45% of taxable income above 1 817 000 |
Tax Rebates
| Tax Rebate | Year | Year |
|---|---|---|
| 2024 | 2023 | |
| Primary | R17 235 | R16 425 |
| Secondary (65 and older) | R9 444 | R9 000 |
| Tertiary (75 and older) | R3 145 | R2 997 |
Tax Thresholds
| Age | Year | Year |
|---|---|---|
| 2024 | 2023 | |
| Under 65 | R95 750 | R91 250 |
| 65 t0 74 | R148 217 | R141 250 |
| 75 and Above | R165 689 | R157 900 |