South African Income Tax
Our tax guide for freelance contractors working in South Africa
Individuals who are tax resident in South Africa are taxed on their worldwide income. Non-residents are taxed on their South African source income only. An individual is resident if present in South Africa for more than 91 days in the relevant tax year and each of the five preceding years, and for more than 915 days in the aggregate of the preceding five tax years. A person is also resident if “ordinarily resident”, i.e. if the person’s settled home or main residence is in South Africa.
Taxable employee remuneration includes all cash amounts received for services rendered and the cash value of fringe benefits for which there is a schedule of valuations. Expenses incurred in the production of income, like business-related travel, car and entertainment expenses, may be deducted. Taxpayers can deduct certain other expenses such as contributions to pension funds registered in South Africa and donations to approved public benefit organizations involved in education and AIDS-related activities (there are maximum limits) and medical expenses (limits depending on age).
Furthermore, there are personal allowances in the form of tax rebates which are deducted from tax payable: primary rebate of ZAR 7’740 for all taxpayers, additional rebate of ZAR 4’680 for taxpayers over 65 years.
Taxable income is taxed at progressive rates from 18% up to 40% on all income over ZAR 450’000 per year in tax year 2007/08. Tax returns usually have to be filed in May or June. Spouses are taxed separately and must submit separate tax returns.