Who Is Exempt From Paying Tax in South Africa?

By Trev Gami •  Updated: 01/10/25 •  5 min read

All people and organizations that earn taxable income in South Africa are liable to pay taxes to the government. However, some individuals and entities are exempt from paying tax, although they operate in the country. Wondering whether you are excluded from paying taxes or not? This article explains everything you want to know about tax exemptions. 

- ADVERTISEMENT -

Who Is Exempt From Paying Tax in South Africa?

First and foremost, if you earn money below the tax threshold gazetted by the South African Revenue Service, you do not qualify to pay tax, although you may file your tax return. Similarly, businesses should also pay tax only when they generate income above the threshold.

South African residents who work in foreign countries are exempt from paying taxes if they spend more than 183 days outside the country. The exemption applies to the first R1.25 million of their income earned from work-related tasks performed outside the country. Natural persons should also meet the following conditions to qualify for tax exemptions.  

Apart from individuals, certain institutions are exempt from paying taxes in South Africa. However, these entities must first obtain the commissioner’s approval for tax exemption and other benefits. The institutions are categorized according to different legislative provisions, and they include the following:

Not-for-profit organizations are also exempt from paying tax since they play crucial roles in promoting the country’s development and providing social assistance to the needy. Once an organization applies for exemption and is approved by SARS, it should get an approval letter with a unique reference number. Without obtaining this letter first, even a non-profit organization may be liable for paying taxes to the government.   

What Are the Tax Brackets in South Africa?

The tax brackets in South Africa are used to determine the tax rates and amounts you will be levied for tax. You should note that the tax rate you will get depends on the amount of money you earn from your employer or business. The following are the tax brackets for the 2025 tax year, which runs from 1 March 2025 to 29 February 2025. 

Taxable Income Rates of Tax

1 – 237 100 18% of the amount taxable

237 101 – 370 500 R42 678 + 26% of the taxable income over 237 100

370 501 – 512 800 77 362 + 31% of taxable income more than 370 500

512 801 – 673 000 121 475 + 36% of taxable income more than 512 800

673 001 – 857 900 179 147 + 39% of taxable income over 673 000

857 901 – 1 817 000 251 258 + 41% of taxable income above 857 900

1 817 001 and above 644 489 + 45% of taxable income over 1 817 000

- ADVERTISEMENT -

How Much Must You Earn to Submit a Tax Return in South Africa?

Employees or pensioners earning more than the threshold are liable to pay tax. However, if you get your money from a single source, there may be no need to file a tax return. The threshold for submitting a tax return in South Africa is R500 000 per year or about R41 666 per month. If you get a bonus, your monthly earnings should be R38 461. This rule applies to individuals who meet the following requirements:

Who Qualifies to Pay Tax in South Africa?

Individuals who earn taxable income from employment, commission, or other sources qualify to pay tax in South Africa. Companies and close corporations are also entitled to pay corporate tax on their annual income. The state derives the bulk of its revenue from personal income tax and corporate tax. Non-residents are also eligible to pay taxes if they get their income from South African sources. To be on the safe side, you should check the type of income you get to determine whether you qualify to pay tax or not.  

What Happens if You Don’t Submit a Tax Return South Africa?

Never fool yourself into believing that you can get away with the case of not filing your tax return. SARS gathers information from various sources to ensure that all individuals and businesses that earn taxable income file their tax returns. Evading tax can lead to serious consequences like penalties or criminal investigation. 

If you fail to register for tax and submit your tax return, SARS can penalize you. For instance, you can get a fixed recurring monthly penalty that ranges from R250 to R16 000 per month, depending on the taxable amount you get. This penalty comes with interest, and it will be applied for 35 months. Therefore, it is a good idea to settle your debt, even if you don’t agree with the penalty, so that it does not continue to accrue interest. 

If you are struggling with several outstanding tax returns, you can consider the voluntary disclosure program (VDP). With VDP, SARS cannot prosecute criminally, and you will get some relief from settling your penalties. Remember that SARS has the power to get garnishee orders to recover funds owed by the employees. It can also access your bank account without your approval. 

If you earn taxable income in South Africa, you should ensure that you pay your taxes and file your tax return on time. Some individuals and companies are exempt from paying taxes due to various factors. Failure to file your tax return can lead to serious implications that can affect your financial situation in the future.   

- ADVERTISEMENT -

Keep Reading

All About Disability And Medical Expense Tax Credits 

All About Disability And Medical Expense Tax Credits 

Today we’ve assembled a quick guide to everything related to the disability and medical expense tax credits from SARS

How Long Does SARS Take to Approve?

How Long Does SARS Take to Approve?

How Long Does SARS Take to Approve? SARS aims to activate new eFiling profiles within 48 hours where no supporting documents are required. 

How to Register for Turnover Tax

How to Register for Turnover Tax

How to Register for Turnover Tax. Read on to learn how to register for turnover tax.  

How Do I Register For VAT on SARS eFiling?

How Do I Register For VAT on SARS eFiling?

This guide will walk you through registering for VAT on SARS eFiling, including the necessary documents and how long the process typically takes

What Are the Consequences of Not Paying Tax?

What Are the Consequences of Not Paying Tax?

What Are the Consequences of Not Paying Tax? Read on to learn the consequences of not paying taxes to the government.    

What is SARS eFiling?

What is SARS eFiling?

What is SARS eFiling? There are many solid reasons to use eFiling, so we compiled this guide to eFiling to help you.

How to File a 2025 Tax Return on eFiling

How to File a 2025 Tax Return on eFiling

This post will walk you through the procedures needed to file your tax return for 2024 electronically. Let's dive in!

How Long Does It Take for SARS to Process Tax Return

How Long Does It Take for SARS to Process Tax Return

This article explains everything you need to know about the duration it takes for SARS to process your tax return. 

How to Check for Agent Appointment on SARS eFiling

How to Check for Agent Appointment on SARS eFiling

How to Check for Agent Appointment on SARS eFiling. Today we walk you through everything you need to know about the process.

How to Register With SARS as a taxpayer

How to Register With SARS as a taxpayer

In this article, we’ll discuss how to register with SARS as a taxpayer and answer some of the common questions users have when using eFiling. 

How Does Tax On Bonuses Work in South Africa?

How Does Tax On Bonuses Work in South Africa?

How Does Tax On Bonuses Work in South Africa? We are here with this helpful guide to taxation and bonuses in South Africa.

How to Activate Personal Income Tax

How to Activate Personal Income Tax

This tutorial will walk you through activating your personal income tax and submitting your tax return using SARS eFiling.

What Is Customs VAT in South Africa?

What Is Customs VAT in South Africa?

This tax, a bit like a toll gate, is a part of the journey of every item that enters South Africa

How to Apply for SARS TCC via eFiling

How to Apply for SARS TCC via eFiling

Here’s everything you need to know about eFiling, SARS, and TCCs, now known as TCSs.

How to Get an Override Code From SARS

How to Get an Override Code From SARS

How Do I Get an Override Code From SARS. Check out the measures you can take to get an override code from SARS.