Understanding South African tax regulations can be daunting. Therefore, knowing when and how to register as a South African Revenue Service (SARS) taxpayer is vital.
This blog post will answer some frequently asked questions about SARS registration and help you understand the criteria for becoming a taxpayer in South Africa.
We will discuss who must register, what is needed to register for SARS eFiling, what qualifies you as a taxpayer, why it is essential to register with SARS, how much income you must earn to register with SARS, and whether everyone has a SARS tax number
Let’s get started!
Who Must Register As a SARS Taxpayer?
South African taxpayers must register as dedicated taxpayers with the South African Revenue Service. Any individual or company that receives income or profits from a source within South Africa must register with SARS as a taxpayer, including any individual who sells goods or services to customers, has employees, or owns rental property in South Africa.
In terms of qualifying criteria, any individual who earns an annual taxable income above the tax-free threshold must register as a SARS taxpayer. This limit includes anyone with a fixed monthly income and anyone whose taxable income is earned on a commission basis from investments, freelance or contract work, or any other form of business income.
To register for SARS eFiling, you will need your original identity document, your passport number if applicable, your South African bank account details, your physical address, and the details of any dependent children under 18 years old. Additionally, all foreign nationals must provide proof of their residential status and passport number before registering with SARS.
Once registered as a taxpayer with SARS, you will receive your unique SARS tax reference number. This number will be required when filing tax returns, opening a bank account in South Africa, and when dealing with various government institutions. It is, therefore, vital to ensure that you are registered as a SARS taxpayer as soon as possible to avoid any potential issues or penalties.
What Is Needed To Register SARS eFiling?
To register for SARS eFiling, you must have the following documents and information available:
- Your South African ID number or your taxpayer reference number
- Your contact details, including physical address and email address
- Your banking details
What Qualifies You As A Taxpayer?
In South Africa, anyone who earns an income, whether it is through a salary or any other form of remuneration, must register as a dedicated taxpayer with SARS. This category includes self-employed people, freelancers, independent contractors, and those who receive any form of investment income.
Individuals are required to register for SARS eFiling, an online system for filing tax returns and submitting tax payments. SARS eFiling allows taxpayers to manage their affairs and submit supporting documents electronically.
To register as a taxpayer with SARS, you must have a valid South African identity document, be a resident of South Africa and earn an income that exceeds the tax threshold (currently set at R91 250 for those below 65 years old or R141 250 for those below 75 years old but above 65 years old).
It is important to note that the tax threshold is subject to change yearly and can be adjusted according to inflation and the cost of living. Therefore, keeping track of any changes made by SARS is crucial.
Why Must I Register For SARS?
Registering with SARS ensures that you are legally compliant and able to meet all of your tax obligations. It also ensures you can file your taxes correctly and pay them on time.
Not only is it crucial to register as a taxpayer, but it is also essential to keep your registration details up to date. The reason is that SARS uses your registration information to send you important notifications about your taxes, such as changes to tax rates or deadlines.
SARS registration also allows you to take advantage of certain deductions or credits available to taxpayers. These deductions or credits can reduce the tax you owe and result in significant savings.
Finally, registering with SARS is the first step toward a good credit score. A good credit score is beneficial if you ever need to apply for a loan or other financial product. In addition, a good credit rating can help you get better terms and interest rates on loans, mortgages, and other products.
How Much Must You Earn To Register With SARS?
If you are an individual, you must register with SARS as a taxpayer once your total annual income exceeds the tax threshold for that year.
The 2025 tax threshold is currently set at R91 250 for those below 65 or R141 250 for those below 75 but above 65 years old. Any individual earning more than R91 250 in a single financial year must register as a taxpayer with SARS and submit an annual income tax return.
Does Everyone Have A SARS Tax Number?
In South Africa, not all individuals have to register for a SARS tax number. However, if you are employed or own a business and receive an income, you must have a valid SARS tax number. You are required to register as a taxpayer if you meet any of the following:
- You are employed by a company and receive an income.
- You are self-employed and earn an income.
- You own a business that generates an income.
- You receive income from investments or rental property.
How Much Income Is Tax-Free?
The South African Revenue Service (SARS) allows for a “tax threshold,” which is the minimum amount of income a person can earn without being liable for tax. This amount is currently set at R91 250 for those below or R141 250 for those below 75 but above 65 and is updated annually.
Any income earned below this amount is exempt from income tax. Therefore, this means that you will not have to pay any taxes on the money you earn from your salary or any other source of income up to this limit.
Any income above this limit will be taxed at progressive rates, meaning that higher earners will pay more taxes than those with lower incomes.
Conclusion
It is essential to know who must register as a SARS taxpayer and the requirements needed to do so. Whether employed or self-employed, you may need to register for SARS eFiling. You may also be required to register if you earn an income over a certain threshold or have capital gains or investment income.
