INCOME TAX SERVICES FOR INDIVIDUALS AND CORPORATES

income tax

Income tax in South Africa is payable to SARS, the amounts due depend on tax residency status and the amount earned by yourself or your company. In January 2001, the South African income tax regime was changed to a residence-based system, from the previously source-based system. Irrespective of source of income, taxpayers residing in South Africa are taxed on worldwide income.

With the expertise offered by the MMS Cloud Accounting team, we can assist both corporates and individuals to meet their annual tax requirements. Meeting your tax deadlines and filing your returns in time, before the yearly deadline, can prevent you from having to pay harsh penalties.

Our standard accounting packages include taxation services to address submission requirements as well as client services that remind you of upcoming taxation deadlines. We also offer SARS registration services for all forms of taxation, including income tax and VAT.

To see our accounting packages, click here.

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    DETERMINING SOUTH AFRICAN TAX RESIDENCY

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    Individuals who are classified as tax residents in South Africa are taxed on all foreign and local income. Tax residency is not limited to individuals only living in the country. Individuals who retain assets in the country, or spend a significant amount of time here, may be considered a tax resident. To avoid unnecessary penalties and interest, it is best to confirm your residency status with SARS.

    Tax residency can be determined through one of two tests:

    1. Ordinarily resident test

    The concept of an ordinarily resident defines a taxpayer as a permanent resident of South Africa, regardless of their time spent outside the country.

    To confirm an individual residency status, SARS considers the following:

    • Nationality
    • VISA status in the travelling country
    • Proof of foreign residency
    • Certification of tax residency from foreign revenue authority
    • Particulars of South African property
    • Particulars of South African business/businesses
    • Details of the immediate family
    • The location of personal belongings
    • Details of social interest subscriptions
    • Frequency of South African visits
    1. Physical presence test
    Should an individual not be classified as a tax resident according to the ordinarily resident test, they may still qualify under the physical presence test, which considers the amount of time physically spent in the country.

    If the below criteria are met, tax residency will be declared:

    • If 91 days or more are spent in South Africa during the current assessment year.
    • If 91 days or more are spent in South Africa in each of the previous five years of assessment.
    • If a total of 915 days or more are spent during the preceding five years.

    MORE ABOUT SOUTH AFRICAN TAX

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    Income Tax is stipulated and regulated by the Income Tax Act No. 58 of 1962 and is the South African’s government’s largest source of income. Taxpayers are required to pay a predetermined sum of monies earned each month, which is determined by their annual income bracket. Tax return submissions are also required by SARS to confirm the correct calculation of income tax and to confirm compliance with stipulated regulations.

    The year of assessment for tax returns covers a 12-month period that commences annually on the 1st of March. Submission deadlines differ depending on the required tax return.

    Individual and Trust Tax Returns (non-provisional):

    • Postal (paper) submissions: The last working day of September.
    • Electronic submissions: The end of November.

    Individual and Trust Tax Returns (provisional):

    • The end of January.
    Company Tax Returns:
    • Within 12 months of the company’s financial year-end.

    CORPORATE INCOME TAX:

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    South African companies, which includes all companies residing and operating within The Republic of South Africa, are liable to Income Tax under the Income Tax Act of 1962. Whether your income is derived from within or outside the country, you are still required to submit an annual tax return and pay the respective taxation due.

    Companies are taxed on the amount of income they receive per tax year (a consecutive 12-month period). Corporate tax is applicable to all of the following types of corporations:

    • Listed / Unlisted public companies
    • Private Companies
    • Body Corporates
    • Share Block Companies
    • Collective Investment Schemes
    • Small Business Corporation (s12E)
    • Dormant Companies
    • Public Benefit Companies
    • Close Corporations
    • Co-operatives

    PERSONAL INCOME TAX:

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    Personal tax is levied on South African residents’ global income, with exemption to avoid double taxation in certain instances.
    The following earnings are subject to tax:
    • Any type of employment income. This includes salaries, bonuses, overtime, and taxable benefits and allowances (these taxes are normally deducted by employers via PAYE)
    • Pension income (not including foreign pensions)
    • Certain capital gains
    • Profits or losses from a business or self-employed trade
    • Annuities
    • Royalties
    • Director’s fees
    • Investment income
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    To pay your tax, you need to obtain a SARS tax number and are required to submit an annual tax return.

    For professional assistance with your personal or business-related tax requirements, be it personal or corporate, please contact us.