Income Tax

Income tax is the government's main source of income and is levied in terms of the Act on the taxable income of people.

Normal tax in South Africa is imposed on all persons in the form of annual tax that is calculated by means of the predetermined tax brackets and applied to a person's taxable income. A tax year in South Africa covers 12 months which starts 1 March of a specific tax year and ends on the last day of February the following year.

The purpose of PAYE is to ensure that an employee's income tax liability calculated on remuneration is settled at the same time that the remuneration is earned. The advantage of this system is that the liability for the year of assessment is settled over the course of that whole year.

Every employer who pays or becomes liable to pay an amount by way of remuneration, or if that amount constitutes a lump sum, is obliged to deduct employees' tax (PAYE, where applicable) from that amount every month. The employees' tax deducted must be paid over to SARS within seven days after the end of the month during which such deduction was made.