How to calculate income tax - South Africa 2018

[@micaleleon6944]

The best video I've seen with regards to income tax in S.A. Hoping to see more. All the best

[@JJTAcc]

Thanks so much!

[@nhlakaniphohadebe8068]

Please come we need more of your work

[@ABAFANATHEBOYS]

Danko Your learnt more in 30 minutes than i did for 2 months of lectures. bless

[@JJTAcc]

Thank you, and thanks for watching

[@Charity000ful]

The background noise is disturbing and moving away the focus.

[@JJTAcc]

Hi. Sorry for the background music. I'm working on something a little more relaxed, but for now that is what I have available. But thank you for watching!

[@nkhensanibambo999]

Thank you for breaking it down in a simpler way

[@nadineahlers2164]

I really appreciate this video. Hope to see more from you!

[@JJTAcc]

Hi Nadine. Thanks for the awesome feedback. I'm working on more content. Let me know if there's a specific topic you would like me to cover, and I'll see what I can do.

[@nadineahlers2164]

@@JJTAcc Well, sometimes it's really hard to understand all the details on expenses and fringe benefits. For example, last semester I learned that employees are still taxed on loans they get from their employer (only a certain percentage), free housing, the company car, etc. Even the medical expenses can get rather complicated, and it seems hard to stay up to date with the changes each year since I have to really search a long time on SARS's website for the details. And which expenses are deductible? For example if someone works from home, online, are they able to deduct rent as an expense? Or only partially? Maybe you could go into more detail of each section, especially fringe benefits. Thank you again for sharing your knowledge with us!

[@PepiVibes]

Hi. Thanks for the video. Can you please elaborate on trade deduction again pls. Thanks again for your time

[@samanthakhandoo759]

Background music is way too distracting..... Content is very good.

[@JJTAcc]

Thank you for the great feedback, and for watching

[@zamokwakhedlamini7208]

This is very educational. Thank you so much!

[@JJTAcc]

You're very welcome!

[@portiafielies4976]

love your video , can you actually show the calc ( the steps) and how to bring the rebate in as well , taxation is a subject for my final year , it will be greatly appreciated

[@JJTAcc]

Hi there Sorry for only responding now. It's really a simple principle. Calculate Taxable Income -> apply tax tables = Tax for the year (TY). Then TY less (rebates) less (payments already made) = Tax payable/(refundable) If you want a more in-depth explanation, my man Andre Bothma made a great video on it in 2019. Check it out here and tell him I sent you: kzbin.info/www/bejne/gXbUnoZnht5oe6c

[@kitsomosegeleng7234]

Please show us how to calculate taxable income where the calculation starts with net profit before tax

[@JayendrenSubramoney]

Fantastic Video!👍 the part about the exempt income is very welcome. I had no idea about agricultural income; I must look into it😀

[@JJTAcc]

Certainly. It is quite interesting. It's almost like agriculture has their own tax laws.

[@fikilemkhize5776]

How do I declare personal expenses like food, to save on tax

[@JJTAcc]

In short, you don't. Section 23(b) of the Income Tax Act specifically prohibits personal expenses to be deducted from income when calculating tax (see below extract from the Act). If you're asking for ways to do it anyway in order to reduce your legal tax obligation, you're at the wrong place (that is tax evasion and a criminal offence). The income where food may be deducted, is when an entity incurs entertainment expenses, however this has to be incurred in order to generate income. An example would be if a sales rep buys lunch for a client, or the CEO of a company uses the company credit card to pay for catering at a board meeting. But if I were to buy food for my family, that is a personal expense and I cannot deduct that. 24. No deductions shall in any case be made in respect of the following matters, namely- (a) ... (b) domestic or private expenses, including the rent of or cost of repairs of or expenses in connection with any premises not occupied for the purposes of trade or of any dwellinghouse or domestic premises except in respect of such part as may be occupied for the purposes of trade: Provided that- (a) such part shall not be deemed to have been occupied for the purposes of trade, unless such part is specifically equipped for purposes of the taxpayer's trade and regularly and exclusively used for such purposes; and (b) no deduction shall in any event be granted where the taxpayer's trade constitutes any employment or office unless- (i) his income from such employment or office is derived mainly from commission or other variable payments which are based on the taxpayer's work performance and his duties are mainly performed otherwise than in an office which is provided to him by his employer; or (ii) his duties are mainly performed in such part;

[@fikilemkhize5776]

@@JJTAcc ok, I understand now, thank. I had misunderstood before, I have not intention of doing tax evasion, but I do wanna save on tax. I will try other strategies, like asking my employer to take my children's school fees, before I am paid. That way, my gross pay is reduced, which will reduce my tax. And I read that is perfectly legal for fees up t0 20k for people earning

[@JJTAcc]

@@fikilemkhize5776 Dependents usually have an impact on the Medical Aid Tax Credit. I have a video on how the 2 credits (MTC and AMTC) are calculated. Regarding the kids' school fees, there's a new limitation that your employer cannot reduce your income through paying kids' school fees if this means it will reduce your salary. You will have to get an increase for this to be applied.

[@fikilemkhize5776]

@@JJTAcc I am thinking of working in the England. I saw that they have a flat tax rate of 20% , if I earn about £50k, which is about R1058958. After I am taxex there, would sars also tax me normally 2? Another question can I buy property instead of paying for a pension fund? Would that give me salary tax relief, since I would be paying property tax

[@caraminnaar1644]

May you please explain the difference between deduction and rebate?

[@JJTAcc]

A deduction reduces your taxable income. This determines your tax bracket, and the resulting tax obligation. A rebate is applied after the tax obligation on the Taxable income is calculated, and reduces the nett tax liability.

[@2Ndlovukazi]

Very helpful video, thank you!

[@JJTAcc]

You're welcome!

[@funandeducation5221]

Can you tell me the formula to calculate Skills development levy (SDL) south Africa in excel...

[@JJTAcc]

Hey Prasanth. The amount of SDL that should be paid by an employer is 1% of the total amount paid in salaries to employees (including overtime payments, leave pay, bonuses, commissions and lump sum payments).

[@muhammeddawood6099]

Can you please do a detailed tax calculation for the feb 2021 year. How to fill in the various fields on the sars portal

[@JJTAcc]

Hi Muahhed. Another KZbinr, Andre Bothma, did a video on this topic in November 2020. I believe it will answer your question. Go take a look, and tell him I sent you. 🙂 kzbin.info/www/bejne/nIPUhn6Gi9FkhMU

[@AfrikaChilz]

Great info...I was clueless about taxes...thanks

[@JJTAcc]

You are most welcome. Thank you for watching!

[@youcanbeabetterperson]

how to submit verification documents at SARS

[@JJTAcc]

You can submit via e-filing (if the request for it was done on e-filing), or at a branch. Right now, with lockdown it's likely that a company will have to submit through e-filing rather than at a branch.

[@Mregas1]

Man, this is day light robbery...yho! Thanks for this great video. Do you have a video giving an example on how to declare gain and losses from cryptocurrencies trading and how to declare profits gained from investments in Bitcoin binary options? Taking into consideration that there are different prices for different exchanges/brokers. Please help with this info.

[@JJTAcc]

Not yet, but I'll be making one soon.

[@puneet241189]

Thanks for such an informative video. I want to know how can an expat receive Retirement Contributions if he/she decides to leave the country after 3-4 years. Also, is the taxation different for expats with Intra-Company Transfer visa?

[@automationcommunity]

Is Taxable Income for provisional Tax payers calculated after interest exemption is deducted and rebates medical aid credits are subtracted or after interest exemption is deducted and before rebates medical aid credits are subtracted ?

[@JJTAcc]

It is calculated in much the same way as the annual income tax is, i.e. after taking into consideration all allowable deductions and applicable exemptions. Provisional Tax is in itself not a different kind of tax. It is merely a provisional tax PAYMENT with some requirements at various times of the year.

[@muhammeddawood6099]

My confusion is around the primary rebate can you do a tax calculation that takes this into account

[@JJTAcc]

Hi Muhammed. Thanks for watching. It's about time I revisit the tax calculation video and update it. I'll elaborate on how to use the tax rebates in the new one, but in short, you can consider the rebate a kind of "tax payment by the government on your behalf". This is deducted from the tax liability, the same way PAYE payments, the Medical Expenses Tax Credit (METC) and Additional METC, and any provisional tax payments are deducted. Don't confuse these deductions with the "allowable deductions" from part 2 of the video, which only reduces Taxable Income.

[@RedJAM47]

Hey great video but I have question. What happens when you have a negative taxable? You pay no tax at all?

[@JJTAcc]

Hi there Sorry for not responding sooner. Yes, if you have a negative taxable income, it's considered a taxable loss and you don't pay any Income Tax. You'll still pay other taxes, such as VAT, fuel levy, transfer duty, etc.

[@mhlelikhanyeza9497]

Thanks for the wonderful video. How do I calculate the highest amount I can contribute towards retirement annually?

[@JJTAcc]

Hey there. Follow the steps in this video until you get to taxable income. Then watch my video on allowable deductions I recently added for the how to calculate the allowable RA deductions.

[@gideonroodt1626]

Is there a possibility you can help me with payable tax for economy class

[@JJTAcc]

Hi there. Thanks for watching. I would be happy to assist. Please send me your query through the "contact us" section on www.pretera.co.za

[@terishar1886]

Hi there. Thank you for your informative videos. Would you be able to speak on other topics viz., how to calculate your marginal tax rate and what are the tax implications for different business entities in SA? Best regards :)

[@JJTAcc]

Great suggestion!

[@karlwithak23]

sa rocks

[@JJTAcc]

Thanks. man!

[@mohammadshabih5293]

is petrol valid deduction? I have a tutor buisness at a university and I buy petrol to get there. Surely that's not personal expenses.

[@JJTAcc]

That depends on a number of factors. Usually, SARS considers travelling between your home and work is considered a personal expense which is prohibited in terms of S23(g). So if this is your only source of income, you would be seen as an employee of the university and the petrol will not be allowed. If you have multiple such client sites where you need to be, then it would be considered allowable.

[@audrajonathan7378]

Great video, thank you! What happens in the event that the pension contribution (Rand value) is greater than 27.5% of gross income in a specific month. e.g. Basic salary is R40 000 and pension contribution for same month is R11 500. Can I still deduct the 27.5% (R11 000)?

[@JJTAcc]

Yes. The initial limit is allowed, and every contribution over and above it is carried over to the next year.

[@audrajonathan7378]

@@JJTAcc thank you so much

[@dorobado4803]

Thank you for the video...can you please advise more on exempt tax (services rendered internationally)? I offer some services internationally and get paid here...is there a way I could avoid paying tax?

[@JJTAcc]

The only 100% sure way to not pay tax in South Africa, is to not be a Resident for tax purposes in South Africa. That means you practically have to leave the country and only come back for very short periods for "holidays". If you do leave and come back after a number of years, all the tax you may have avoided will be payable. But Section 10(1)(o)(ii) may be to your benefit. Here's a link to where SARS explains what's happening. Pay special attention to the section as to what happens after 1 March 2020 www.sars.gov.za/ClientSegments/Individuals/Tax-Stages/Pages/Foreign-Employment-Income-Exemption.aspx#:~:text=25%20million%20of%20foreign%20employment,earned%20over%20and%20above%20R1.

[@nadiaadams4606]

Great video! Is there any book on tax that you would recommend to read?

[@JJTAcc]

Thank you. Not that I know of. Most tax books are handbooks for studying purposes and go into detail about it. If you have a specific situation, you may find asking for a book for that purpose may be better.

[@Nditso]

Very informative

[@JJTAcc]

Thank you, and thanks for watching.

[@play-by-play]

thanks loADS

[@JJTAcc]

Leratwo Kekana you're more than welcome. Thanks for watching

[@tsundzukasambo5867]

Hi,Can you please explain how overtime is taxed?Does it move your tax bracket or it is taxed separately?

[@JJTAcc]

There's 2 answers, but a single principle. The first is the yearly-tax answer, and the second is the monthly-tax answer. I answer assuming there is PAYE applicable to the income in this case. 1. Overtime is added to your total income for the year. From SARS' point of view, it MAY bump you into a higher tax bracket (depending on how close you are to the edge). 2. Employers usually follow the SARS deduction tables when deducting PAYE from a monthly salary payout. Overtime will increase the amount of tax for the current month. When calculating a monthly PAYE deduction, or when using the tables, the overtime is added to the total income. For example, let's say a salary of R10000 gets another R5000 overtime. The amount of tax for that month will be calculated on R180000 for the year (R15000 x 12). If this is the only overtime worked for the entire year, the total income will then be R125000 (R10000 x 12 + R5000 overtime). That will usually result in a small tax refund. It is not taxed separately.

[@tsundzukasambo5867]

Thank you

[@k.zngobese4571]

So forex traders also pay tax ? ..... Let say you withdraw once a year R10 million. Will it be considered as capital gain and be taxed %18 not %45?

[@JJTAcc]

Yes, Forex Traders also pay tax. Unfortunately the application of Capital Gains Tax vs Income Tax depends greatly on what your trading is. As a general rule, SARS will apply Income Tax principles and not CGT. If you want to apply the CGT rules, you will have to prove it is a capital gain and not a gain of an Income nature.

[@Yameen200]

@@JJTAcc Do you know/have a video or know any source i can refer to regarding taxation on income from trading the markets including these questions. Based on your reply i presume trading gains are taxed at income tax rates not capital gains rate. 1 How is trading gains taxed. Is it taxed according to withdrawals from a trading brokerage account or by all gains within the trading account 2 What if you are using an offshore trading brokerage ? How does question 1 tie in to this 3 Forming a business entity/company for the purpose of trading markets would incur company tax rate of 28% for all yearly gains under R20million if im not mistaken ? 4 What happens if yearly gains exceed that ? etc

[@gelolekwadi4411]

hi i need advice. i have a bcom accounting degree and i want to be a tax practitioner how do i go about it? from SA

[@JJTAcc]

You will need to gain some experience in the field. Usually you work for a tax practitioner for a couple of years. Then you need to register with a Recognised Controlling body. The main ones are SAIT, CIBA, SAIPA, SAICA and ICB. Only SAIT does only tax, the others does some form of bookkeeping/accounting as well, which as a tax practitioner let's you offer additional services to companies and be more profitable.

[@Melharts]

Does this apply to contract workers? Or are they taxed differently

[@JJTAcc]

Yes. Contract workers are taxed annually on the same basis. However, many contract workers earn below the tax threshold, therefore the primary rebates will erase any taxes payable by them in that year. Just be aware that in some instances contract workers can be seen as self-employed (like freelancers, etc.) and they are then likely to be considered provisional taxpayers.

[@Melharts]

@@JJTAcc Thank you so do much for your prompt reply. Your videos and time given is very appreciated

[@JJTAcc]

@@Melharts you are most welcome.

[@jerminahjames676]

So when one wins the lottery the winnings will fall under which tax bracket or what kind of tax is that...what is it called?

[@JJTAcc]

That is a very good question. The answer would depend on your intention and how often you play the Lotto. Let's say this was a once-off ticket purchase and you won the jackpot, then it would be considered capital gains. Therefore the Capital Gains Tax rules would apply. However, if you regularly play the lotto and often get small winnings (such as R1000 here, R250 there), then it would be considered general Income and the usual Income Tax rules apply.

[@jerminahjames676]

@@JJTAcc yoh! So let's say I win R10 million and now I'm taxed as an income tax(cause I play regularly) am I going to be taxed under the 45% category cause now I would have won over R1,5 million?

[@JJTAcc]

@@jerminahjames676 unfortunately, yes, that is true. But it does mean you take home 55%

[@jerminahjames676]

@@JJTAcc wow! that's still a bit steep though but Thanks for clarifying that factor. One last question what capital gains tax and how does it work? What percentage does it usually go for when one has won such an amount?

[@JJTAcc]

@@jerminahjames676 OK, so CGT is not a tax per se, but rather an inclusion into your Income Tax calculation. Let's say you won R10 million. Then as an individual you include 40% into your Income Tax calculation. That would be R 4 million that you add to your Taxable Income as per +- 10:20 of this video. This would then automatically bump you into the top tax bracket, but you would then pay Income Tax on the (R4 million + your normal annual income) at the rate of 45%. So, essentially to find out how much tax you would pay on your winnings (in this example), it would be 45% of the 40% of the R10 million, and work out about 18%, or R1.8 million tax payable to SARS.

[@giggsl5011]

hi, just sent you an email via your website, any chance you could respond to that email via mail, then if u have a video on taxes and rental property

[@JJTAcc]

Hi Giggs. Sorry for the late reply, I saw your email come through this morning and responded to it. I don't have a video on taxes and rental property yet, but I am planning a video on rental contracts (from the lessee's point of view) for later this year. I'll add this as a topic.

[@JABULANINgomane-ed5vp]

next time stop playing music when teaching please its disturbing our attention.

[@JJTAcc]

Noted

[@jeyzong101]

U need a mic bro

[@JJTAcc]

Any specific recommendations?