Introduction to income tax
If you are receiving income, you may be liable to pay income tax. Income tax is a tax that is levied on your income and applies to individuals, trusts and companies.
Income tax was explained in more detail on one of my previous blogs ( What is income tax? ) but as that information often changes annually, you should reference the new tax tables below:
Did you know? 2013 tax tables often confused for 2012 tax tables?
There is often confusion when searching for the correct tax tables as you would expect to find the tax tables referenced under the year we are currently in, i.e. this year’s tax tables should logically be 2012. What is important to note is that the tax tables always refer to the end date of a tax season. Hence the tax season that runs through the majority of 2012, is referred to as the 2013 season, as it ends in February 2013.
Do I need to register for Income tax?
In an effort to ensure the widest possible tax compliance, SARS requires that anyone earning an income must register for income tax. Even if you fall below the minimum threshold, this is still a requirement. Should you need assistance registering and would like to consult a professional yet affordable tax consultant, contact Brett on 021 421 4444.
In some circumstances, you may choose not to submit a tax return if you earn less than R120 000 per year. This is permissible if the following are met:
- Your income is from a single employer
- Your income is for a full financial year ( 1 March to end February)
- You didn’t receive an allowance, i.e. no travel allowance from which PAYE was not deducted in full.
If you are unsure of whether you should register, please contact Dirmeik Consulting to ensure that you are tax compliant.
2013 Tax tables
The 2013 tax tables below apply to the period between March 2012 to February 2013.
|Tax Rates – Individuals|
|Taxable income in Rands||Tax Rates|
|0 – 160 000||18% of each R1|
|160 001 – 250 000||R28 800 + 25% of the amount above R160 000|
|250 001 – 346 000||R51 300 + 30% of the amount above R250 000|
|346 001 – 484 000||R80 100 + 35% of the amount above R346 000|
|484 001 – 617 000||R128 400 + 38% of the amount above R484 000|
|617 001 and above||R178 940 + 40% of the amount above R617 000|
|Tax Class||Tax Rebates|
|Additional||R6 390 (Persons 65 and older)|
|Tertiary||R2 130 (Persons 75 and older)|
|Tax Class||Tax Threshold|
|Below age 65||R63 556|
|Age 65 to below 75||R99 056|
|Age 75+||R110 889|
Using the tax tables to calculate the income tax you owe
There are a series of steps as listed in the Income Tax Act No. 58 of 1962 which accountants use to determine the income tax you owe. These have been listed here for interest and it is recommended you contact a professional for accurate calculations.
- Calculate your gross income
Determine your total income, then subtract those amounts that are excluded from the definition of “gross income” according to the Income Tax Act.
- Subtract exempt income
Your income is calculated by subtracting all amounts that are exempt from tax from your gross income. Be sure to check with your tax consultant what amounts can be deducted.
- Subtract allowable deductions
With your income calculated in step2, you can now subtract allowable deductions from this income, add taxable gains and then subtract the other deductions, leaving you with your “taxable income”
- Multiply taxable income by your tax rate
With your “taxable income”, you can now multiply it by the tax rate that applies to this taxable income in order to determine your tax liability.
- Subtract applicable rebates
In this final step, you can take the amount calculated in step4 and subtract the applicable rebates from it, giving you your final figure.
Next steps with Tax tables
If you are in the position to understand tax tables and the Income Tax Act, you will be able to use the tax tables above to accurately calculate the income tax you are liable for. However for most people who do not have a financial background, this may prove a difficult task. If you need assistance and are based in South Africa, call professional, affordable tax consultant Brett on 021 421 4444.