A tax rate can be defined as the percentage at which an individual or corporation is taxed. South Africa uses a progressive tax rate system. This means the percentage of tax charged for individuals increases as their taxable income increases. This can be compared to other countries, which apply a fixed rate to determine the relevant tax rate of each individual taxpayer.

How does this apply to me?

The tax rates for individuals for the 2024 tax year (March 2023 – 29 February 2024) are:

However, the effective tax rate of an individual (the actual % of the tax you end up paying) is not always the same as the rate of tax per tax bracket. This difference is shown in the following example:

This is then reduced by the applicable tax rebate:

• R17,235 for individuals younger than 65 years
• R26,679 for individuals between 65 and 75 years
• R29,824 for individuals 75 years and above.

The tax brackets have been adjusted to combat bracket creep, i.e., brackets are adjusted with inflation. So, if a taxpayer receives an inflation-related adjustment to their salary, it’s unlikely that they’ll move from one tax bracket to another.

How do I reduce my taxable income?

Contributions made by an individual to certain Regulation 28 retirement assets, such as a retirement annuity, pension or provident funds, can qualify as a deduction to reduce your taxable income. In such a scenario, the deduction allowed in the year of assessment must not exceed:

• 27,5% of your remuneration∗ or taxable income (not including retirement lump sum benefit/withdrawal and severance benefit) before any deduction for contributions

AND

• The maximum allowed deduction of R350,000

* Remuneration is any amount of income which is paid/payable to any person whether in cash or otherwise (e.g. fringe benefit, bonus, overtime) and whether or not for services rendered. See SARS.

Contributions can also be made to a tax-free savings account with ‘after-tax income’. Any amount received from the tax-free savings account will not be subject to income, dividends or capital gains tax. Each person is entitled to invest up to a maximum of R500,000 over their lifetime, subject to a maximum annual contribution limit of R36,000.**

** This is not financial advice, and a registered financial advisor should be consulted prior to investing any funds.

Important due dates

SARS has announced the annual tax filing dates for the 2023 assessment year (1 March 2022–28 February 2023).

The filing season will open on 7 July 2023. SARS is yet to announce the last day for submission for non-provisional individual taxpayers.

You can find the tax rates for the 2023 year of assessment here.

Being tax efficient is an important part of great financial management. In this blog, a group of South African tax experts at AJM Tax share their tips and explanations on tax issues. Learn everything you need to know about tax, from deductions you never knew about to retirement savings and capital gains. The first Tuesday of every month is Tax Tuesday.