Income Tax and the Individual

Source: SARS Guide on Income Tax and the Individual, 25 June 2022 version

This article is part of a series of articles providing basic insight into the tax affairs of Individuals based on South African Tax Legislation.

  1. When is an individual liable for income tax?

Individuals who receive taxable income in excess of a specific amount (known as the “tax threshold” amount) in a year of assessment are liable for income tax. The tax threshold amount for the 2022 year of assessment is –

• R87 300 for individuals below the age of 65;
• R135 150 for individuals aged 65 years but under 75; and
• R151 100 for individuals aged 75 years and older.

Once the tax threshold has been exceeded, tax is determined according to a sliding scale (known as marginal or statutory rates). The applicable rates for the 2022 year of assessment are set out in Annexure A.

  1. What is a year of assessment for an individual?

A year of assessment for an individual consists of 12 months beginning on the first day of March of a specific year and ending on the last day of February of the following year. The 2022 year of assessment therefore started on 1 March 2021 and ended on 28 February 2022.

  1. What are some of the different kinds of income that an individual can be taxed on?

Examples of amounts an individual may receive, and from which the taxable income is determined, include –

• income from employment such as salaries, wages, bonuses, overtime, taxable benefits (fringe benefits) and allowances;
• severance benefits and certain lump sum benefits;
• income from a business or trade;
• income or profits arising from an individual being a beneficiary of a trust;
• fees from companies or close corporations for services rendered;
• investment income such as interest, foreign dividends and dividends from a Real Estate Investment Trust (REIT);
• rental income;
• income from royalties;
• annuities;
• pensions; and
• certain capital gains.

  1. Do all individuals have to register as taxpayers and submit income tax returns?

4.1 Registration

An individual who becomes liable for any income tax or who must submit an income tax return in the prescribed form and manner. A business day means a day which is not a Saturday, Sunday or public holiday.

SARS may require further particulars or documents from a person in order to finalise the registration. A person who fails to provide all particulars and documents requested may be regarded as not having applied for registration until all the required details have been submitted. SARS is also permitted to register a person for tax if that person fails to apply for registration.

4.2 Submission of income tax returns

Income tax returns must be submitted to SARS on an annual basis. This is carried out during a period known as “Tax Season”, which is the period during which current income tax returns can be obtained and submitted for assessment. The income tax return applicable to individuals is known as the ITR12 form. The Tax Season for the 2022 year of assessment opened on 1 July 2022.

Income tax returns may be submitted –

• electronically at a SARS branch office (by appointment); or
• through eFiling or via the SARS MobiApp, provided the individual is registered for eFiling

4.2.1 Individuals required to submit an income tax return

An individual must submit an income tax return if, during the 2022 year of assessment, he or she –
• is a resident and carried on any trade (other than solely as an employee) either in or out of South Africa;
• is not a resident and carried on any trade (other than solely as an employee) in South Africa;
• receives gross income from employment (salary, wages etc.) from more than one employer and which exceeds the tax threshold;
• received any remuneration, or if any remuneration accrued to that person, in respect of services rendered outside South Africa;
• is a resident and had a capital gain or capital loss exceeding R40 000;
• is not a resident and had capital gains or capital losses from the disposal of an asset;
• receives any taxable allowance or advance (such as a travel, subsistence, public office, computer or cellular telephone allowance) and whose gross income exceeds the applicable tax threshold;
• was granted a taxable benefit in the form of a right of use of motor vehicle and whose gross income exceeds the applicable tax threshold;
• receives an income tax return from SARS or is requested to furnish an income tax return regardless of the amount of income received or accrued;

• is resident in South Africa, and who –

 held or owned any funds in foreign currency or assets outside South Africa, if their total value exceeded R250 000 at any time during the year of assessment;
 had income or capital gains from foreign currency or assets outside South Africa that was attributed under the Act;
 held a participation right in a controlled foreign company;
 had taxable turnover.

• is a non-resident who receives or to whom interest accrues from a source in South Africa, and –

 he or she was physically present in South Africa for a period exceeding 183 days in aggregate during the 12 month period before the date on which the interest was received or accrued; or
 the debt from which the interest arises is connected to a permanent establishment of a person in South Africa; and

• receives local interest (other than from a tax-free investment) in excess of the exemption thresholds, being R23 800 if the individual is below the age of 65, and R34 500 if the individual is 65 years or older.

4.2.2 Individuals not required to submit an income tax return

An individual is not required to submit an income tax return for the 2022 year of assessment (even when that individual’s gross income exceeds the applicable tax threshold at which income tax becomes payable) if the gross income of that individual consisted solely of one or more of the following:

• Remuneration payable from a single source and which did not exceed R500 000 for the year of assessment, and employees’ tax was correctly withheld in terms of the deduction tables prescribed by the Commissioner for SARS (the Commissioner) on
this remuneration;
• Local interest (other than from a tax-free investment) not exceeding R23 800 if the individual is below the age of 65, or R34 500 if the individual is 65 years or older.
• Exempt dividends, and the individual was not a resident throughout the 2022 year of assessment.
• Amounts received or accrued from a tax-free investment.

This concludes part 1 of this series of tax articles for Individuals and their tax affairs.

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