Za Income Tax

South Africa Income Tax -- Self-Employed Skill v2.0

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

Section 1 -- Quick reference

Read this whole section before classifying anything.

Progressive tax table (2026/2027 year of assessment):

Tax thresholds (below = no tax):

Medical tax credits (s6A, 2026/2027):

Turnover tax table (Sixth Schedule):

Conservative defaults:

Section 2 -- Required inputs and refusal catalogue

Required inputs

Minimum viable -- bank statement for the tax year (1 March -- 28 February). Acceptable from: FNB (First National Bank), Standard Bank, Nedbank, Absa, Capitec, Investec, Discovery Bank, TymeBank, or fintech (Revolut, Wise).

Recommended -- invoices, IRP6 payment records, medical aid statements, RA contribution certificates, vehicle logbook.

Ideal -- complete bookkeeping, prior year ITR12, IT34 (assessment), asset register.

Refusal catalogue

R-ZA-1 -- Company/CC/Trust. Trigger: client is a company, close corporation, or trust. Message: "This skill covers sole proprietors only. Companies file ITR14 at 27% corporate rate. Trusts file ITR12T."

R-ZA-2 -- Foreign income. Trigger: significant foreign income. Message: "Foreign income, s10(1)(o)(ii) exemption, and DTA analysis are outside scope. Consult a registered tax practitioner."

R-ZA-3 -- Capital gains tax. Trigger: disposal of capital assets. Message: "Capital gains tax is outside scope."

R-ZA-4 -- Age unknown. Trigger: age not provided. Message: "I cannot compute without knowing your age -- it determines rebates and tax threshold."

Section 3 -- Transaction pattern library (the lookup table)

3.1 South African banks (fees and interest)

3.2 SA government and statutory bodies

3.3 SA utilities and telecoms

3.4 Insurance

3.5 SaaS and software -- international

3.6 Professional services (SA)

3.7 Retirement contributions

3.8 Transport and travel

3.9 Office and supplies

3.10 Food and entertainment

3.11 Internal transfers and exclusions

Section 4 -- Worked examples

Example 1 -- Standard self-employed, mid-range

Input: Age 35, revenue R600,000, expenses R180,000, RA R80,000, medical R3,500/mo (main + 1 dependant), provisional paid R40,000. Computation: Net profit R420,000. s11F = 27.5% x R420,000 = R115,500 (within R430,000 cap). Taxable = R304,500. Tax = R44,136 + 26% x R59,300 = R59,554. Less rebate R17,820. Less medical credit R9,024 (R376 x 2 x 12). Net = R32,710. Less provisional R40,000. Refund R7,290.

Example 2 -- Turnover tax

Input: Non-professional sole proprietor, turnover R650,000. Computation: R650,000 turnover falls within 2026/27 bracket R600,001--R950,000 at 1% above R600,000. Tax = 1% x R50,000 = R500.

Example 3 -- Entertainment disallowed

Input: Client claims R15,000 client entertainment dinners. Result: Review under s 11(a) and s 23(g). If bona fide business development with evidence of business purpose, may be deductible. If no clear nexus to income production, disallow. s 23(m) does NOT apply to sole proprietors. VAT input on entertainment is separately blocked under s 17(2)(a) VAT Act.

Example 4 -- Retirement cap exceeded

Input: Taxable income R2,000,000, RA R600,000. Computation: 27.5% x R2,000,000 = R550,000 but cap R430,000. Deduction = R430,000. Excess R170,000 carries forward.

Section 5 -- Tier 1 rules (deterministic)

5.1 Progressive rates

Apply rate table to taxable income. One table for all individuals regardless of marital status. Legislation: Income Tax Act, rates schedule.

5.2 Rebates

Primary R17,820 (all). Secondary R9,768 (65+). Tertiary R3,252 (75+). Credits against tax, not deductions from income. Legislation: s6.

5.3 Interest exemption

R23,800 (under 65). R34,500 (65+). Excess is taxable. Legislation: s10(1)(i).

5.4 s11F retirement deduction

27.5% of greater of remuneration or taxable income (before deduction). Cap R430,000. Excess carries forward or adds to tax-free retirement lump sum (R550,000). Legislation: s11F.

5.5 Medical tax credits (s6A)

Main + first dependant: R376/mo each. Additional: R254/mo. Credit against tax. NOT a deduction from income. Legislation: s6A.

5.6 Provisional tax (IRP6)

Based on estimated current year. 1st: 31 Aug (50%). 2nd: last day Feb (top-up to 100%). 3rd voluntary: 30 Sep. Under-estimation: 20% penalty if < 90% of actual (income < R1M) or 80% (> R1M). From years of assessment commencing on or after 1 March 2026, the basic-amount safe harbour threshold is R1,800,000 (up from R1,000,000). Legislation: Fourth Schedule.

5.7 Turnover tax

Non-professional services, turnover up to R2,300,000. Replaces income tax, CGT, dividends tax, VAT. Cannot claim normal deductions. Legislation: Sixth Schedule.

5.8 Wear-and-tear (s11(e))

Straight-line over the useful life per SARS IN 47 (Issue 5). Items costing R7,000 or less: full write-off in year of acquisition under BGR 7 (small-value assets). Items above R7,000: straight-line over IN 47 useful life (computers 3 years; office furniture 6 years; office equipment 5 years; cellular phones 2 years; printers 3 years). Legislation: s 11(e), SARS IN 47, BGR 7.

5.9 Entertainment

Sole proprietor entertainment is tested under the general deduction formula: s 11(a) (actually incurred in the production of income) plus s 23(g) (not of a domestic, private, or capital nature). Bona fide client business development meals with evidence of business purpose may be deductible. s 23(m) does NOT apply to sole proprietors -- it restricts deductions against employment income only. Note: VAT input on entertainment is separately blocked under s 17(2)(a) of the VAT Act regardless of income tax treatment. Legislation: s 11(a), s 23(g). Cross-reference: VAT Act s 17(2)(a).

5.10 Home office

Dedicated room, regularly and exclusively for trade. IN 28 is strict. Dual-use rooms: NO deduction. Proportion = room area / total home. Legislation: s11(a), IN 28. Warning: the area used for trade is 'tainted' for CGT purposes -- on disposal of the residence, the primary residence exclusion does not apply to the tainted portion. Practitioners must warn clients before first claiming home office.

5.11 Record keeping

5 years from submission. Invoices, receipts, bank statements, logbooks, asset register. Legislation: TAA s29-32.

Section 6 -- Tier 2 catalogue

6.1 Home office qualification

Why: IN 28 requires regular and exclusive use. Default: NOT deductible. Question: "Is there a dedicated room used only for business?"

6.2 Motor vehicle logbook

Why: Business km unknown. Default: 0% business use. Question: "Do you have a logbook with date, destination, km, and purpose for each trip?"

6.3 Turnover tax vs normal tax

Why: Depends on expense level and qualification. Default: Present both. Question: "What are your total business expenses? Are you providing professional services?"

6.4 s6B additional medical expenses

Why: Complex, depends on age/disability. Default: Do not claim without reviewer. Question: "Age 65+? Disability? Out-of-pocket medical expenses?"

6.5 Bad debts

Why: Must prove irrecoverable. Default: Do not claim. Question: "Was this debt previously included in income? Is it truly irrecoverable?"

Section 7 -- Excel working paper template

Sheet "Transactions"

Columns: Date, Counterparty, Description, Amount (ZAR), Category (Revenue/Expense/Wear-and-tear/RA/Medical/EXCLUDE), Deductible amount, Default?, Question, Notes.

Sheet "ITR12 Computation"

Step-by-step per Section 5: gross income, deductions, taxable income, tax, rebates, medical credits, provisional tax offset.

Section 8 -- Bank statement reading guide

CSV formats. FNB exports use comma CSV with DD/MM/YYYY. Standard Bank uses semicolons. Nedbank and Absa offer various formats. Common columns: Date, Description, Amount, Balance.

SA-specific patterns. "DEBICHECK" = authenticated debit order. "MAGTAPE" = batch payment. "SASWITCH" = ATM network. "PREPAID" = likely personal (airtime top-up). "MUNICIPALITY" = rates and taxes.

Provisional tax. Two/three payments per year to SARS. These are tax payments, not expenses. EXCLUDE.

Medical aid. Monthly debits to Discovery/Bonitas/etc. These are NOT deductible from income -- they generate s6A credits against tax.

RA contributions. Monthly debits to Allan Gray/Coronation/etc. Deductible under s11F with cap.

Section 9 -- Onboarding fallback

9.1 Age

Inference: Not inferable. Always ask. Fallback: "What is your age at 28 February 2027?"

9.2 Residency

Inference: SA bank accounts suggest resident. Fallback: "Are you a South African tax resident?"

9.3 Business type

Inference: From counterparty patterns. Fallback: "What is your trade/profession?"

9.4 Turnover tax election

Inference: Not inferable. Fallback: "Have you elected turnover tax?"

9.5 Medical aid

Inference: Monthly medical aid debits. Fallback: "Are you on medical aid? How many dependants?"

9.6 RA contributions

Inference: Monthly RA debits. Fallback: "Do you contribute to a retirement annuity?"

9.7 Provisional tax paid

Inference: SARS payments in statement. Fallback: "What IRP6 amounts have you paid?"

Section 10 -- Reference material

Test suite

Test 1 -- Mid-range. Age 35, R600K revenue, R180K expenses, R80K RA, medical R3,500/mo. Net tax R32,710. Test 2 -- Senior. Age 68, R200K revenue, R50K expenses, R30K RA. Below threshold. R0 tax. Test 3 -- Turnover tax. R650K turnover. Tax R500. Test 4 -- RA cap. R2M taxable, R600K RA. Deduction R430,000. Excess carries forward. Test 5 -- Medical credits. 6 members. R21,216/year credit (R376 x 2 + R254 x 4 = R1,768/mo x 12). Test 6 -- Under-estimation penalty. R200K estimated, R450K actual. 20% penalty applies if estimate < 90% of actual (for income < R1,800,000 safe harbour threshold).

Edge case registry

EC1 -- Interest exemption. R23,800 <65 / R34,500 65+. Excess taxable. EC2 -- Turnover tax + professional. NOT eligible. EC3 -- RA exceeds cap. Excess carries forward. EC4 -- Home office dual use. NOT deductible. EC5 -- Provisional under-estimation. 20% penalty. EC6 -- Medical credits large family. Compute per-member. EC7 -- Foreign income. ESCALATE. EC8 -- Turnover tax exit mid-year. Transition rules apply. EC9 -- Entertainment. Sole proprietor entertainment is tested under s 11(a) and s 23(g); s 23(m) does NOT apply to sole proprietors. EC10 -- Assessed loss. Carry forward under s20; SARS may query.

Prohibitions

• NEVER compute without knowing age
• NEVER apply tax below age-threshold
• NEVER allow entertainment deductions without evidence of business purpose under s 11(a) and s 23(g)
• NEVER deduct RA above R430,000 cap
• NEVER allow turnover tax for professional services
• NEVER use prior year income for provisional tax (SA uses estimated current year)
• NEVER treat medical credits as income deductions
• NEVER allow home office for dual-use rooms
• NEVER claim home office without warning the client of the CGT consequence on disposal of the residence (Eighth Schedule para 47)
• NEVER allow income tax as a deduction
• NEVER present calculations as definitive

Sources

1. Income Tax Act 58 of 1962
2. Tax Administration Act 28 of 2011
3. SARS Interpretation Notes (IN 28, IN 47, IN 14)
4. SARS eFiling -- https://www.sars.gov.za

Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a registered tax practitioner, CA(SA), or equivalent licensed practitioner in South Africa) before filing or acting upon.

The most up-to-date, verified version of this skill is maintained at openaccountants.com.

Source: OpenAccountants — open tax Guides for AI, reviewed by named CPAs/CAs/EAs. Quality: accountant-reviewed. Reviewed by Werner Britz, CA(SA). For always-current figures and named-accountant backing, connect the OpenAccountants MCP server (openaccountants-mcp).