What income is exempt from tax in South Africa?

Exempt income refers to various types of income that will not be taxed in South Africa. There are the obvious types that are exempt, but many people are unaware of the other less commonly spoken about exemptions. Read about what income is exempt from tax in South Africa below:

Threshold

An income that is exempt from tax – one that most people are very aware of – is an income that falls below the threshold for gross income. Their taxable income can be determined by adding income such as salaries and other income, as well as taking note of any deductions. Once their monthly taxable income has been determined, their gross income can be determined to see whether they sit below or above the threshold.

Age

The threshold does vary, depending on age. For individuals under the age of 65, their taxable income is anything above R83100 a year. Individuals between the age of 65 and 75 are only liable for income tax if they earn R128650 a year and, finally, those that are 75 and above can only be taxed if earning more than R143850 a year.

Inheritance

Any person receiving an inheritance should include this in their tax return; however, this income will be exempt from tax. The inheritance is not considered a part of an individual’s gross income and is referred to as a ‘capital receipt’ – a receipt that creates a liability or causes a reduction in the government’s assets.

Disability income

Any person earning a disability income will be exempt from tax on this income. However, the disability income benefits are taxed. Only a small portion will be taxed from your take-home pay.

Donations

Donations, such as a large monetary gift from someone to help pay for education or other expenses, cannot be taxed. The recipient of this money will receive it tax-free, though it should be declared in their tax return.