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.
Speak to the expert tax services team at Outcor today!