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There are three forms of income SARS exempts from income tax. Do you qualify for any of them?

by , 28 October 2014
Your company has to pay SARS income tax. Otherwise, you're guilty of tax evasion and that means serious legal troubles.

But did you know there are certain types of income that this rule doesn't apply to?

There are, in fact, three forms of income that are exempt for income tax.

Read on to find out what they are to see if you qualify for an exemption...

 

Do you qualify for any of these three income tax exemptions?

 
1. SMEs, dividends and uniforms
SARS exempts the following:
 
  • Amounts you received or accrued under the 'Small, Medium Enterprise Development Programme', that came into operation on 1 September.
  • Certain dividends from normal tax, e.g dividends on listed shares, etc. But you must still disclose the value or allowance of any income from dividends in your tax return. 
  • If you wear a special uniforms that area clearly distinguishable from ordinary clothing.
 
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2. Retirement gratuities 
The exemption of R30 000 applies to lump sums of the following nature:
 
  • Amounts you receive or accrue for the relinquishment, termination, loss, repudiation, cancellation or variation of your employment.
  • Amounts you receive by or accrue as a bonus, gratuity or compensation on or because of the termination of your job.

Note: This does not include any lump-sum award from a pension fund, provident fund, retirement annuity fund or benefit fund.
 
3. Royalties and authors 
The following are also exempt from tax:
 
  • Amounts subject to tax on withholding of royalties.
  • Amounts you receive by or accrue as the author of a work that has a copyright on it.
 
There are six more forms of exempt income that are safe from tax. Find out about and you can find them in the Practical Tax Loose Leaf Service. 
 


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