Many people are asking this question around this concept, and there is an ongoing misconception that the R500k threshold means that if you earn less than R 500 000.00 per annum, there is no obligation to pay tax. This is off course NOT true.

What the R500k threshold refers to is whether or not there is a requirement to submit a tax return, pending if certain criteria is met.

This year taxpayers who meet ALL of the following criteria need NOT submit a tax return:

  • Their total employment income for the year before tax is not more than R500 000.00
  • They only receive employment income from ONE EMPLOYER for the full tax year (This would mean only one IRP5 has been received for the year)
  • They have no other form of INCOME (e.g. car allowance, business income, and rental income, taxable interest or income from another job)
  • They don’t have any additional allowable tax related deductions to claim (e.g. medical expenses, retirement annuity contributions and travel expenses).

In conclusion, when earning R 500 000.00 or less, and meeting the above-mentioned criteria, an individual need not submit a tax return, however, the individual is not exempt from tax as monthly PAYE contributions would have been made by the employer.