Taxes
Paid to SARS (South African Revenue Services)
SARS acts as a tax collector on behalf of the government
WHY DO WE PAY TAXES?
Source of income for the govenment
Tax money is used to fund social and economic programmes, and provide public goods and
services
Government revenue comes from mostly income tax, and a third comes from indirect
taxation (mainly VAT)
Feb = budget speech from minister of finance (outlines government’s total expenditures for
the next financial year and how these will be funded)
Paying taxes is a legal obligation
TAX EVASION- illegal methods to reduce tax liabilities
TAX AVOIDANCE- legal methods and good financial planning to reduce their tax burden
Types of taxation
DIRECT TAXTAION
Based on the principle that people should contribute to the wealth of the state in the same
measure that they contribute to their own wealth
Income tax
Levied on all income and profit recieved by a taxpayer
Income = any salary, wage, bonus, remuneration for overtime or lump sum recieved
Tax is also levied on any business revenue, any investments, rental income, annuities,
pension, capital gains or dividends
, Main revenue of the state and is a legal obligation
Paid in the form of PAYE or provisional tax
South Africans pay income tax by submitting tax forms, from SARS, before a certain date. Tax
forms are issued every year (1 March to end of Feb)
PAYE
Tax that an employer subtracts from employees’ income and pays to SARS
Advantage- not one lump sum
Employer issues an employee taax certificate (IRP5/IT3) to employee. It reflects the total
income in a particular tax year as well a the total PAYE deductions paid over to SARS.
Pension fund contributions and payments towards a retirement annuity are deducted
BEFORE tax is calculated
Provisional tax
Paid by persons with an irregular income
Paid in 2 amounts (middle and end of year) so not one large amount to pay
Based on estimated income of taxpayer and is based on income in previous year
IRP6 form
Final liability is determined when the tax form is filled in and assessed by SARS
Capital gains tax
Tax paid on profit made when asset is sold
Property tax
Paid by homeowners to municipality
Amount according to value and location of property
Used for infrastructure for services (library etc.)
Paid to SARS (South African Revenue Services)
SARS acts as a tax collector on behalf of the government
WHY DO WE PAY TAXES?
Source of income for the govenment
Tax money is used to fund social and economic programmes, and provide public goods and
services
Government revenue comes from mostly income tax, and a third comes from indirect
taxation (mainly VAT)
Feb = budget speech from minister of finance (outlines government’s total expenditures for
the next financial year and how these will be funded)
Paying taxes is a legal obligation
TAX EVASION- illegal methods to reduce tax liabilities
TAX AVOIDANCE- legal methods and good financial planning to reduce their tax burden
Types of taxation
DIRECT TAXTAION
Based on the principle that people should contribute to the wealth of the state in the same
measure that they contribute to their own wealth
Income tax
Levied on all income and profit recieved by a taxpayer
Income = any salary, wage, bonus, remuneration for overtime or lump sum recieved
Tax is also levied on any business revenue, any investments, rental income, annuities,
pension, capital gains or dividends
, Main revenue of the state and is a legal obligation
Paid in the form of PAYE or provisional tax
South Africans pay income tax by submitting tax forms, from SARS, before a certain date. Tax
forms are issued every year (1 March to end of Feb)
PAYE
Tax that an employer subtracts from employees’ income and pays to SARS
Advantage- not one lump sum
Employer issues an employee taax certificate (IRP5/IT3) to employee. It reflects the total
income in a particular tax year as well a the total PAYE deductions paid over to SARS.
Pension fund contributions and payments towards a retirement annuity are deducted
BEFORE tax is calculated
Provisional tax
Paid by persons with an irregular income
Paid in 2 amounts (middle and end of year) so not one large amount to pay
Based on estimated income of taxpayer and is based on income in previous year
IRP6 form
Final liability is determined when the tax form is filled in and assessed by SARS
Capital gains tax
Tax paid on profit made when asset is sold
Property tax
Paid by homeowners to municipality
Amount according to value and location of property
Used for infrastructure for services (library etc.)
