The government has increased the amount of salary that is taxable in South Africa according to the 2017/2018 budget. This means that more of your hard-earned money will go towards taxes, and less will be available for you to spend or save as you please. The revenue authority has designed the new tax brackets to target high-income earners, so if you fall into this category then you can expect to pay more tax than ever before. Even if your salary isn’t particularly high, though, it’s important to be aware of how much tax you’ll be paying so that you can plan accordingly.
What is income tax?
Income tax is the normal tax which is paid on your taxable income. Here are some examples of your earnings that are subject to income taxes. They are;
Your salaries, wages, bonuses and overtime pays
Your business revenue
Your trust fund
Returns or dividends from your investment
Residual income from your rental properties
How much of your salary is actually taxable?
In South Africa, the amount of salary that is taxable depends on your income tax bracket. For example, if you fall into the lowest income tax bracket, you will only be taxed on 7% of your salary. However, if you fall into the highest income tax bracket, you will be taxed at a rate of 45%. Therefore, it is important to know what your income tax bracket is in order to calculate how much of your salary is actually taxable.
What can you do to reduce your tax burden?
With reducing your tax burden, there are a few things you can do. For instance, if you are earning a salary, you can stay up to date on the amount of salary that is taxable in South Africa. This way, you can avoid paying more taxes than necessary. Consider talking to a financial adviser about other ways to reduce your overall tax burden. Finally, remember that everyone’s situation is different – so what works for one person may not work for another.
