STUDY UNIT 12 INCOME AND EXPENDITURE FOR INDIVIDUALS TAX FRAMEWORK FOR INDIVIDUALS Section Study unit Gross income – general and specific inclusions S1 4,5,11 Add: Deemed inclusions E.g. S 8(4)(a) 5,13 Less: Exempt income Ss10 and 10A 5,11 Less: Deductions S11 6 Less: Assessed losses s20 and 20A 12 Add: Taxable capital gain S26A Less: Section 11(F) fund contributions 12 Add: Other amounts included 'taxable income' E.g. s8(1)(a) 12 Less: Section 18A donations (donations to PBO) 12 Less: retirement funds S11(F) =TAXABLE INCOME Normal t ax payable according to scale S5(1) Less: Rebates (primary, secondary, tertiary) S6(2) 11 Less: Rebates (tax credit on medical costs) S6A and s6B 11 Less: Employees tax (PAYE) 5 16 Less: Provisional tax 16 = TAX PAYABLE/REFUNDABLE FOR THE YEAR Individuals = taxable according to the tax table Individuals receive extra deductions ( rebates) according to their age Normal tax payable by a natural person to SARS via: Employees tax (PAYE) Provisional tax payments Withholding tax on sale of immovable property in SA (if individual is a non-resident) Final settlement on assessment Partial year of assessment (<12 months) Rebates are reduced proportionally Sec 6(4) prescribes apportionment based on months, SARS apportions according to nr of days Partial YoA arises in year which taxpayer: o is born (if liable for tax) o dies o goes insolvent 2024 Tax table Taxable income (R) Rates of tax (R) 0 – 237 100 0 + 18% of each R1 (Taxable income) 237 101 – 370 500 42 678 + 26% of taxable income above 237 100 370 501 – 512 800 77 362 + 31% of taxable income above 370 500 512 801 – 673 000 121 475 + 36% of taxable income above 512 800 673 001 – 857 900 179 147 + 39% of taxable income above 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 above 1 817 000 YoA = 1 March – 28/29 Feb No partial YoA in the year which taxpayer: o Starts/stops working o Immigrated to/emigrates from SA Section 6(2) – Rebates for natural persons Non-refundable & cannot be carried forward to next YoA; only available to natural persons 2024 rebates Age of taxpayer Rebate Primary rebate < 65 R17 235 Secondary rebate ≥ 65 < 75 R9 444 Tertiary rebate ≥ 75 R3 145 Can only reduce taxable income to R0 (Can’t create a refund) Natural person only becomes liable for normal tax in 2024 YoA if taxable income exceeds R95 750 (17 235/18%) Section 6A(2) – Medical tax credits Credits (not deductions) cannot be used as basis for a refund, cannot exceed amount of normal tax payable and cannot be carried forward to next YoA Medical scheme tax credits calculated: R364 in respect of benefits to the person R728 in respect of benefits to person AND 1 dependent R728 in respect of benefits to person & 1 dependant, + R246 for benefits to each additional dependent For EACH month those fees are paid To qualify, NP must pay fees to a registered SA medical scheme/foreign medical fund Dependent = spouse, child, immediate family member that is a dependent, person considered as dependent by medical aid scheme. Child = own, adopted, illegitimate, stepchildren NP can only be a member /registered as a dependent on ONE medical scheme, but he/she can pay fees for more than one medical scheme/fund (e.g. child pays for parent’s medical scheme) Contributions made by employer = taxable fringe benefit = deemed made by employee Section 6B – Additional medical expenses tax credits = The amount that was not recovered from medical scheme that was paid by TP during the YoA for (rebate for medical expenses) A medical practitioner, dentist, optometrist, herbalist etc. for professional services rendered/medicines supplied to TP Nursing home/hospital or a nurse, midwife or nursing assistant A pharmacist for medicines supplied on the prescription of a TP or their dependent To qualify for deduction, the medical scheme & all practitioners/any mentioned above have to be registered with respective controlling bodies Dependent = spouse, child, child of spouse, , immediate family member that is a dependent, person considered as dependent by medical aid scheme. Child = - unmarried ≤ 18 or - unmarried ≤ 21, wholly or partially dependent & not liable for tax or - unmarried ≤26, wholly or partially dependent, not liable for tax & full-time student or - any age with disability, wholly or partially dependent & not liable for tax Summary of s6A and 6B medical tax credits Category S 6A(2)(b) S 6B Medical scheme Medical expenses Persons 65 years and older (S 6B(3)(a) OR person, his/her spouse or child has a disability S 6B(3)(b) R364 for benefits to the person, R728 For benefits to the person plus 1 dependent, R728 for 2 dependents and R246 for benefits to each additional dependent 33,3% credit for any contributions that exceed 3 times the medical tax credit plus 33.3% additional qualifying medical expenses paid (excluding contributions) Apportioned for death/insolvency (x/365)
