7 Common Taxes you pay

1. INCOME TAX

Personal income tax brings in the most revenue for the government – more than VAT and more than corporate tax (not listed here). In the 2022/23 tax year, the government expects to receive about R588 billion from income tax, just over a third of the R1.6 trillion it expects from all taxes and duties. If you are below 65 years of age and earn less than R91 250 for the year, you won’t pay any income tax. (See pages 8 & 9.)

2. VALUE-ADDED TAX (VAT)

This is a tax of 15% on almost everything you buy, so the more you buy, the more goes to SARS. Essential services and goods that are exempt include public transport, accommodation, illuminating paraffin, brown bread, maize meal, samp, dried mealies/ beans/lentils, tinned pilchards/ sardines, milk and milk powder, rice, fruit and vegetables, vegetable oil and eggs. Government expects R440 billion from VAT this tax year.

3. FUEL LEVIES

For each litre of petrol that goes into your tank, you pay the government a general fuel levy of R3.85 (R3.70 per litre for diesel), plus the Road Accident Fund levy of R2.18 per litre (petrol and diesel), totalling R6.03 a litre. At petrol currently priced at about R21 per litre, over 30% of your fuel bill is tax. While you may think this is high, in parts of Europe the ratio is 60%.

4. SIN TAXES

These are duties on alcohol and tobacco products – on top of the VAT you pay on them. They have slowly increased over the years. Whether they are much of a deterrent is debatable; they will bring in about R500 million in revenue for the 2022/23 tax year. The targeted excise tax for wine, beer and spirits is 11%, 23% and 36% of the weighted average retail price respectively, while that for tobacco products is 40%.

5. CAPITAL GAINS TAX

This applies to assets you own that increase in value, such as shares in companies and property. You pay tax on the gain (in other words, your profit) between the asset’s value when you bought it and its selling. A portion of the gain (40%) must be added to your taxable income, although the first R40 000 is excluded. There are higher exclusions on residential property and the sale of assets on your death. (See pages 12 & 13)

6. DONATIONS TAX

If you give money or a gift to another person or company, you, the donor, are taxed on that donation at 20%. If you are ultra-wealthy and the gift is more than R30 million, the rate is 25%. You are allowed to give money/gifts of up to R100 000 each year without paying tax, and you don’t pay any tax on gifts or donations to a spouse (but you do pay on donations to your children). You can also make tax-free donations to charities.

7. TRANSFER DUTY

You pay transfer duty on the transfer of a property into your name. This progressive tax starts at zero for properties with a value of R1 million or less. For the 2022/2023 tax year, on a property of R2 million you will pay about R45 000. However, on a property of R2.5 million, just half a million more, the transfer duty doubles to about R90 000. This is just one of the expenses one needs to factor in when buying a property.