Do you need to file a tax return?

Published: Nov 04, 2019

Every year, there seems to be confusion about who needs (or doesn’t need) to file a tax return to the South African Revenue Service (SARS).

Most non-provisional taxpayers are classified as those who earn a salary and pay tax through Pay as You Earn (PAYE), which is deducted by the employer. In addition to paying a salary, an employer may also offer his/her employees retirement benefits by investing in an umbrella fund.

It’s important to note that:

  • Not all individuals who earn an income are required to pay income tax and secondly,
  • Not all taxpayers may need to file an income tax return. Let’s break it down for you.

Who is responsible to pay income tax?

You are liable to pay income tax if you earn more than a specific amount (known as the ‘tax threshold’). For 2019’s year of assessment, the threshold amounts are

  • R78 150 for individuals who are younger than 65 years old.
  • R121 000 for individuals who are 65 or older, but younger than 75 years old.
  • R135 300 for individuals who are 75 years old or older.

Who is obliged to file an income tax return?

South African residents

1. Those who DO NOT need to file a tax return

South African tax residents shouldn’t have to file tax returns if his/her gross income falls under one or more of the following classifications.

South African interest income less than

  • R23 800 for individuals 65 years or younger
  • R34 500 for individuals 75 years or older; and/or
  • Amounts received from a tax-free investment; and/or
  • Up to R500 000 of gross salary income from only one employer and the employer has deducted tax.

2. Those who only need to file a tax return if their income is more than the tax threshold

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Individuals who are South African tax residents MUST file tax returns if their income is higher than the tax threshold (explained above) and one of the following applies:

  • He/she received a taxable allowance or advance from his/her employer (e.g. computer, travel or cell phone).
  • He/she used a vehicle supplied by his/her employer.
  • He/she must file a return if they changed jobs during the tax year or have more than one employer or source of income.
  • He/she has another source of income, such as interest, income from rental or extra income from a side business. (e.g., freelancing)

3. Those who need to file a tax return, irrespective of the amount they earned

South African tax residents MUST file a tax return (regardless of the amount of income he/she earned is less or more than the tax threshold) if

  • SARS has sent him/her a tax return and must complete it, regardless of the gross income they received.
  • He/she sold assets, and the capital gain or loss was more than R40 000 for the tax year of assessment.
  • He/she carried on a business (not as an employee) in or outside of South Africa.
  • He/she earned a foreign salary for work performed as an employee outside of South Africa.
  • He/she earned income or capital gains from foreign currency or assets outside of South Africa.
  • He/she owned foreign currency or foreign assets, and the total value was higher than R225 000 at any point during the tax year.

Non-South-African residents

1. Those who DO NOT need to file a tax return

People who are not South African tax residents don’t have to file a tax return if they received dividends from a South African source (e.g. investments in stocks) and were a non-resident for the duration of the 2019 tax year.

2. Those who NEED to file a tax return

Individuals who are not South African tax residents MUST file a tax return if:

  • He/she received interest from a South African source. He/she were physically present in South Africa for more than 183 days during the 12 months before the interest was received or accrued.
  • The debt from which the interest is earned is connected to their permanent establishment in South Africa.
  • He/she sold assets and made capital gains or losses from the disposal of South African fixed property; or rights in a fixed property; or shares in a company or have an interest in a trust.
  • He/she has at least 80% of the value of the interest is in South African fixed property, and they hold at least 20% of the shares or rights of the company or trust; or
  • Capital assets effectively connected with their South African permanent establishment.
  • He/she carried on a business (not as an employee) in South Africa.