Tax return threshold is not the same as a tax exemption – SAPA

The South African Payroll Association (SAPA) has clarified that the new tax return threshold does not mean that people earning less than R500 000 don’t have to pay tax.

Around a month earlier, South African Revenue Services (SARS) commissioner Edward Kieswetter announced the increase of the tax return threshold from R350 000 to R500 000.

What this means is that people earning less than R500 000 per year were not obliged to submit a tax return.

Tax return threshold

This is not to say that if you earn less than R500 000 you should not submit a tax return. There are stipulations that, if not fulfilled, mean you would need to submit a tax return anyway.

“It is important that taxpayers understand the conditions under which they still need to file tax returns, and if they are unsure about any of the conditions, it is always safer to just submit your return,” said SAPA executive committee member Jetro Malapane.

According to the SARS website, you would need to submit a tax return, even if you earn less than R500 000 per year unless you fill all of the following criteria:

• Your total employment income/salary for the year before tax (gross income) was not more than R500 000
• You only received employment income/salary for the full year of assessment from one employer
• You have no car allowance/company car/travel allowance or other income (e.g. interest or rental income)
• You are not claiming tax related deductions/rebates (e.g. medical expenses, retirement annuity contributions other than pension contributions made by your employer, travel)

Tax exemption threshold

The income tax threshold for 2019 is R78 150. If you earn that much or less per year you do not have to pay any income tax whatsoever.

There seems to have been some confusion in this distinction, which led to SAPA’s clarification.

“Some taxpayers are under the wrong impression that if they earn less than R500 000, they don’t have to pay tax,” Malapane said.

“There is however a difference between the tax threshold and the tax return submission threshold. The tax threshold means that if you earn less than the tax threshold amount, you won’t have to pay tax. This amount for the 2019 tax year was R78 150.”