Tax Tuesday: Your effective tax rate

In Latest, Tax Tuesday by De Wet De Villiers

Being in the middle of the 2020 tax filing season and halfway through the 2021 tax year, we wanted to clarify how the SARS tax brackets work and what your effective tax rate is for each. South Africa applies a sliding scale to determine the relevant tax rate. This isn’t the case in some other countries where a fixed rate is applied.

Tax Tables

We have replicated both the 2020 and 2021 Rates of Tax for Individuals below. Feel free to download it and play around. I’ve added the last three columns to give you an indication of your effective tax rate, which is normally much lower than your tax bracket rate. This is further reduced by your tax rebates, e.g. for the 2021 tax year the rebate is R14,220 for individuals younger than 65 years of age.

Additionally, you will also notice that on the same level of income you are currently paying less tax in 2021 than during 2020. This is because SARS have adjusted the tax brackets for the 2021 tax year, which largely remained unchanged for the 2020 tax year. This has meant that if your salary is adjusted by inflation you should not move from one tax bracket to another.

Everyone should also be reminded that contributions to your retirement annuity will reduce your taxable income. Capital gains will also form part of your taxable income for purposes of determining the deduction limit in relation to your retirement annuity.

Tax Season Reminder

Just a reminder that, if you are an individual, your annual tax filing for the 2020 Tax Year (1 March 2019 to 28 February 2020) should be finalised by 16 November 2020. If you’re not registered for eFiling it should have been finalised by 22 October 2020. Provisional taxpayers who use eFiling have until 29 January 2020.

If you’re freaking out because it won’t be done in time, there’s no need to panic (we hope), as SARS will only levy a non-compliance penalty if you’re two years behind on your tax filing.

Download the workbook here.


Being tax efficient is an important part of great financial management. In this blog, a group of South African tax experts 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. Don’t miss it!


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