Submitting a tax return often feels overwhelming, yet it remains a necessary part of managing your finances responsibly. Everyone who earns an income above a certain threshold in South Africa must pay tax, and trying to sidestep this obligation is illegal. 

But when you know how tax works and what you're allowed to claim, you can organise your finances in a way that ensures you pay only what you're legally required to – nothing extra.

Tax basics for full- or part-time employees

Permanent employees usually pay tax through the pay-as-you-earn (PAYE) system. Your employer deducts tax before paying you your salary each month and pays the tax directly to the South African Revenue Service (SARS). This helps you avoid having to budget for provisional tax payments separately. 

The downside is that PAYE doesn't automatically consider your other possible deductions. So filing a yearly tax return is important, as it's your chance to claim back any allowable expenses. You can handle this through SARS eFiling, or consult a tax professional to identify what you're entitled to deduct.

Tax obligations for freelancers and contractors

If you work for yourself, you'll need to register as a provisional taxpayer and pay tax generally twice a year (in August and February), although you can make a top-up payment in September of the following year. Because you don't have an employer submitting tax on your behalf, it's vital to know your tax bracket and set aside the right amount for tax whenever you receive income. 

Provisional taxpayers benefit from being able to factor in their deductions upfront, meaning you pay SARS only what you owe. However, this makes it even more important to understand the tax rules. Miscalculating your deductions could lead to unexpected penalties, so professional guidance can be helpful.

How to legally reduce your tax burden

Your tax rate depends on how much you earn. If you earn below the yearly threshold, you won't pay tax at all. Once your income exceeds that threshold, tax is calculated according to brackets that increase as income rises. 

Because SARS adjusts these brackets regularly, it's wise to check for updates each March after the annual budget speech. Knowing your bracket will also let you figure out what deductions or investments could bring your taxable income down.

Here are some practical ways to ensure you pay only what you are required to pay:

1. Track your deductible expenses

Different jobs are allowed different deductions – such as travel expenses when travelling for business, or entertainment costs when having business meetings – so it's worthwhile to get expert advice on what applies to you. Keep clear records and receipts of all deductible expenses, whether you're an employee or a freelancer. Digitising receipts or using simple accounting tools can save time and prevent complications if SARS asks for verification.

2. Consider tax-efficient investments

Some investments, such as retirement annuities, offer tax benefits. You can deduct up to 27.5% of your taxable income when contributing to approved retirement products, subject to the updated annual cap of R430,000 (increased from the previous R350,000). Contributions that exceed this cap are carried over to future years, ensuring you don't lose the tax benefit. You can make regular monthly contributions, ad hoc payments, or a single lump sum before the end of the tax year. These contributions may help reduce your taxable income and, in some cases, even lower your tax bracket.

As well as retirement annuities, you can also contribute to a tax-free savings investment, either in the form of a savings account, fixed deposit or even a tax-free savings unit trust account. However, you can contribute only R46,000 a year (increased from the previous R36,000 limit).

3. Claim qualifying remote work or business expenses

If you work from home as a freelancer or remote employee, certain expenses may be deductible – provided that the space is used strictly for work. If your working arrangement has changed (for example, shifting from office to home), it's important to update your deductions accordingly when filing.

4. Donate to registered charities

You can deduct donations made to charities listed as approved public benefit organisations under section 18A of the Income Tax Act from your taxable income, provided that the total donations for the year are not more than 10% of that income. To qualify, make sure you obtain and keep the official section 18A certificate from the organisation, which SARS will need to validate your deduction. 

Remember that if your donation exceeds 10% of your taxable income, the excess amount is not lost – it is carried forward to the following tax year and treated as a donation in that year.

5. Keep a logbook if you use your own vehicle for work

If you use your personal car for business purposes, a detailed logbook allows you to claim for business-related travel. Record every trip from the beginning of March every year – including distance, destination, and purpose – and store all related receipts.

Filing your return

Tax returns can be completed on SARS eFiling, where some information may already be prepopulated – like your IRP5 from your employer, and the interest you earned on your bank account or any of your other investments. You'll need to review the details, ensure your deductions are correctly included, and flag any errors before you finalise your return. 

If you're unsure about the process, a registered tax practitioner can help you make sure your return is accurate and compliant. While there may be a fee, the potential savings and reduced stress often outweigh the cost.