Income Tax South Africa

Tax isn’t the most popular topic of conversation no matter which county in the world you live in, not just because it usually involves handing over large sums of money, but because it can also be extremely complicated to the ordinary man in the street.

The South African tax year starts every year on the 1st of March, but for individual the normal taxpayer’s tax season opens 1 July and ends on the 25th of November and for provisional taxpayers the tax season also opens 1 July with the deadline for income tax returns is 31 January

South African Tax law states that foreigners living in the country for 183 days or more within one tax year will be considered temporary residents for tax purposes. Foreigners living here for a period of three years will be deemed full residents and be required to pay tax on all income, both generated overseas and in South Africa.

It is empirical to remember that even non-South African residents are taxed on their South African income but South African residents are taxed on their worldwide income. As a foreigner living and working in South Africa, employees’ tax is deducted on a ‘pay-as-you-earn’ basis and paid by employers the tax to the authorities monthly.

It is generally in your interest to avoid becoming a tax resident in South Africa, and consulting an accountant before moving is advised, so as to plan your move carefully.

South African income tax rates vary from 18 per cent to 40 percent. Should you sell a South African property and gain by it, capital gains tax of 10 percent may apply.

The problem that most foreign persons in South Africa face is that local employers and tax practitioners (often the South African Revenue Services as well!) want to treat you like normal South Africans. This is not correct and in your best interest. Depending on your circumstances, different rules apply to you and these rules will always be to your benefit.

Working as a foreigner in South Africa takes some planning

Foreigners wishing to work in South Africa would benefit greatly by planning it carefully in advance. It will be greatly beneficial to you to make the effort not to become a tax resident in South African, but if you have no other choice, then it’s best to know beforehand exactly when you will become one, so as to take optimum steps. Your tax status may be impacted by the class of your work permit and application, as may your exchange control residency; therefore it is vital to take these into consideration.

Expatriate Tax Obligations

As a non-resident you will pay tax on your South African source income. The rules can become quite complex but the following is a good starting point:

  • Note that days worked outside South Africa are not taxable in South Africa. Income that you earn when working outside South Africa will therefore be tax free.
  • You will not pay any tax on investments outside South Africa. This would include interest, shares speculation gains, dividends, income from property etc.

Planning Expatriate Pay in South Africa

Very often, a lack of planning will result in foreign employees allowing their local employers to construct their remuneration packages in a way that is usually not beneficial to either the immigrant or the employer. In order to avoid being taxed as a South African employee, the following should be considered:

  • Rand or other currency package
  • Where the expatriate will be working
  • Who is the employer
  • Is the expatriate’s package guaranteed net or gross
  • Relocation allowances
  • Residential accommodation provided by the employer is exempt should the accommodation not be the expatriate’s “usual place of residence”

What benefit entitlement should the expatriate receive such as car, medical cover, offshore or local retirement funding, home leave, children school costs, security etc.

We strongly suggest before moving to South Africa to sit down with your current employer and go over each of the points above e and if need be contact a professional tax consultant in South Africa for expert advice.

Employment Agreements

It is strongly suggested that before you sign your contract you negotiate your benefits and agreements. Special clauses to give legal effect to the above should be considered and this must be part of the final expatriate agreement. The practice of giving one letter of employment initially, another for the work permit application and then a final one for the tax consequences does not work. Professional tax filing assistance is also a must-have for an expatriate employee. Proper planning and tax preparation really can save a not insignificant amount of taxes.

Income tax rates for the assessment year ending February 2010/11 are as follows:

Taxable Income (R)

Tax Rate (%)

Cumulative Tax (R)

Up to 57,000





18% of each R1

140,000 – 221,000


R25,200 +25% of amount above R140,000

221,001- 305,000


R45,450 +30% of amount above R221,000

305,001 – 431,000


R70,650 +35% of amount above R305,000

431,001 – 552,000


R114,750 +38% of amount above R431,000

552,001 and above


R160,730 +40% of amount above R552,000

Income tax calculator