Tax 101 – Income tax made easy

10 Aug 2021

A guide for beginners: Income tax made easy

We simplify the complexities of the tax system and provide you with the basic principles in a way that is easy to understand.

What is tax?

Income tax in South Africa is levied on all income and profit. It is the government’s main source of income imposed by the Income Tax Act No 58 in 1962. It covers all income and profit, including individual, company and trusts. Before 2001 the South African tax system was ”source-based”, meaning that income was taxed in the country that it originated. In 2001 the tax system was changed to ”residence-based”, meaning that South African citizens are taxed on their income, no matter where it is generated, while non-citizens are only subject to domestic tax.

The South African Revenue Service (SARS) is responsible for collecting tax in South Africa.

SARS plays the following roles:

  • They collect tax.
  • They ensure that citizens are tax, customs and excise compliant.
  • They provide a customs and excise service to facilitate legitimate trade, which protects our economy and society.
  • They contribute directly to economic and social development by collecting money that government uses to deliver on promises.

How is tax collected?

Tax is assessed over a 12-month period starting from 1 March to 28 February the following year, for individuals and trusts. For companies, the period of assessment is over the financial year that the company is registered for.

Tax made easy

The simplest way to manage income tax matters is to register for SARS e-Filing. All your relevant tax information is retrievable on your SARS e-Filing profile, such as the required income tax forms (ITR12 income tax returns), statements of accounts for both income tax as well as penalties, if you have any.

Simply visit to register

  • Select register before you select an individual.

You may have to upload the following documents:

  • Your latest IRP5 income tax certificate – this must reflect your income tax reference number.
  • Copy of your ID.
  • Proof of your residential address.
  • A bank statement that reflects the name of your bank, your name, account type and account number.

Please note that the documents may not be older than three months.

Make sure that your e-Filing registration information, which you submit to SARS, is accurate and up to date.

Don’t submit a tax return to SARS:

According to current SARS regulations, you do not need to submit a tax return if you are a normal employee, earning less than R500 000 per tax year, and employed by one employer for the full tax year.

You must submit an annual tax return to SARS:

  • If you have not been employed for a full tax year or changed employment during a tax year.
  • If you receive any remuneration other than salary, e.g. a travelling allowance.
  • If you have a medical aid or retirement annuity that is not administrated through your employer’s payroll.

With Legal&Tax you’re not alone

Our advisors are ready to assist you with your tax return submissions and SARS related queries. Contact us for more information.

Article sourced from Legal&Tax.

See also:

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Johan Swart

Johan Swart is head of Tax at Legal&Tax. He is registered as a Master Tax Practitioner with SAIT and has been with Legal&Tax for 13 years. Read more about Johan Swart


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