2025 SARS tax pocket guide (Part Two)

Amounts contributed to pension, provident and retirement

annuity funds during a year of assessment are deductible by

members of those funds. Amounts contributed by employers

and taxed as fringe benefits are treated as contributions by

the individual employees. The deduction is limited to 27.5%

of the greater of the amount of remuneration for employees’

tax purposes or taxable income (both excluding retirement

fund lump sums and severance benefits). The deduction is

further limited to the lower of R350 000 or 27.5% of taxable

income, before the inclusion of a taxable capital gain. Any

contributions exceeding the limitations are carried forward

to the immediately following year of assessment, and are

deemed to be contributed in that following year. The amounts

carried forward are reduced by contributions set off against

retirement fund lump sums and retirement annuities

Medical and disability expenses

In determining tax payable, individuals are allowed to deduct

a rebate based on:

• •Monthly contributions to medical schemes by the 

  individual who paid the contributions up to R364 for 

  each of the first two persons covered by those medical 

  schemes, and R246 for each additional dependent. This 

  rebate is referred to as a medical scheme fees tax credit; 

and in the case of:

• •An individual who is 65 years and older, or if an individual, 

  his or her spouse, or his or her child is a person with a 

  disability, 33.3% of the sum of qualifying medical expenses 

  paid and borne by the individual, and an amount by which 

  medical scheme contributions paid by the individual 

  exceed three times the medical scheme fees tax credits 

  for the tax year;  

or

• •Any other individual, 25% of an amount equal to the sum 

  of the qualifying medical expenses paid and borne by 

  the individual, and an amount by which medical scheme 

  contributions paid by the individual exceed four times the 

  medical scheme fees tax credits for the tax year, limited 

  to the amount that exceeds 7.5% of taxable income 

  (excluding retirement fund lump sums and severance 

  benefits). 

This rebate is referred to as an additional medical

expenses tax credit.

Donations

Deductions in respect of donations to certain public benefit

organisations are limited to 10% of taxable income (excluding

retirement fund lump sums and severance benefits). The

amount of donations exceeding 10% of the taxable income is

treated as a donation to qualifying public benefit organisations

in the following tax year.

Allowances

Subsistence allowances and advances

Where the recipient is obliged to spend at least one night away

from his or her usual place of residence on business, and the

accommodation to which that allowance or advance relates is

individuals (at least 55 years old), when a small business

with a market value not exceeding R10 million is disposed

of; and

• •The annual exclusion for individuals is increased to 

  R300 000 in the year of death. 

DIVIDENDS TAX

Dividends tax is a final tax at a rate of 20%, in respect of dividends

paid by resident companies, and non-resident companies on

shares listed on the Johannesburg Stock Exchange or other

South African-licensed exchanges. Dividends are tax exempt

if the beneficial owner of the dividend is a South African

company, retirement fund, or other exempt person. Non-

resident beneficial owners of dividends may benefit from

reduced tax rates in limited circumstances. The tax is to be

withheld by companies that pay the taxable dividends, or by

regulated intermediaries in the case of dividends on listed

shares. The tax on dividends in kind (other than in cash) is

payable and is borne by the company that declares and pays

the dividend.

OTHER WITHHOLDING TAXES

In limited circumstances, the applicable tax rate may be

reduced in terms of a tax treaty with the country of residence

of a non-resident.

Royalties

A final tax at a rate of 15% is imposed on the gross amount of

royalties from a South African source payable to non- residents.

Interest

A final tax at a rate of 15% is imposed on interest from a South

African source, payable to non-residents. Interest is exempt

if payable by any sphere of the South African government, a

bank, or if the debt is listed on a recognised exchange.

Foreign Entertainers and Sportspersons

A final tax at the rate of 15% is imposed on gross amounts

payable to non-residents for activities that they exercise in

South Africa as entertainers or sportspersons.

Disposal of Immovable Property

A provisional tax is withheld on behalf of non-resident sellers

of immovable property in South Africa, to be set off against the

normal tax liability of the non-residents. The tax to be withheld

from payments to the non-residents is at a rate of 7.5% for a

non-resident individual, 10% for a non-resident company, and

15% for a non-resident trust that is selling the immovable

property.

OTHER TAXES, DUTIES AND LEVIES

Value-Added Tax (VAT)

VAT is levied at the standard rate of 15% on the supply of goods

and services by registered vendors. The rate increases to

15.5% from 1 May 2025 and to 16% from 1 April 2026.

A vendor that makes taxable supplies of more than R1 million

per annum must register for VAT. A vendor that makes taxable

supplies of more than R50 000, but not more than R1 million

per annum, may apply for voluntary registration. Certain

supplies are subject to a zero rate, or are exempt from VAT.

Transfer Duty<

Transfer duty is payable at the following rates, with effect from

1 April 2025, on transactions that are not subject to VAT:

Acquisition of property by all persons:

Estate Duty

Estate duty is levied on the property of residents and the South

African property of non-residents, less allowable deductions.

The duty is levied on the dutiable value of an estate, at a rate

of 20%, on the first R30 million, and at a rate of 25% above R30

million.

A basic deduction of R3.5 million is allowed in the determination

of an estate’s liability for estate duty, as well as deductions

for liabilities, bequests to public benefit organisations, and

property accruing to surviving spouses.

Donations Tax

• •Donations tax is levied at a flat rate of 20% on the 

  cumulative value of property donated since 1 March 2018, 

  not exceeding R30 million, and at a rate of 25% on the 

  cumulative value of property donated since 1 March 2018, 

  exceeding R30 million. 

   

in the Republic of South Africa, and the allowance or advance

is granted to pay for:

• •Meals and incidental costs, an amount of R570 is deemed to 

  have been expended per day; or 

• •Incidental costs only, an amount of R176 is deemed to have 

  been expended per day. 

Where the accommodation to which that allowance or

advance relates is outside the Republic of South Africa,

a specific amount per country is deemed to have been

expended. Details of these amounts are published on the SARS

website (www.sars.gov.za), under Legal Counsel/Secondary

Legislation/ Income Tax Notices/2025/Notice 4458, published

on 1 March 2024.

Where the recipient is, by reason of the duties of his or her office

or employment, obliged to spend a part of a day away from his

or her usual place of work or employment, a reimbursement

or advance for expenditure actually incurred by the recipient

is exempt if the recipient is allowed by his or her principal to

incur expenditure on meals and other incidental costs for that

part of the day, and the amount of the reimbursement does not

exceed R176.

Travelling allowance

Rates per kilometre, which may be used in determining the

allowable deduction for business travel against an allowance

or advance where actual costs are not claimed, are determined

using the following table:

Note:

• •Eighty per cent of the travelling allowance must be 

  included in the employee’s remuneration for the purposes 

  of calculating PAYE. The percentage is reduced to 20% if 

  the employer is satisfied that at least 80% of the use of the 

  motor vehicle for the tax year will be for business purposes. 

• •No fuel cost may be claimed if the employee has not borne 

  the full cost of fuel used in the vehicle, and no maintenance 

  cost may be claimed if the employee has not borne the full 

  cost of maintaining the vehicle (e.g., if the vehicle is covered 

  by a maintenance plan). 

   

• •The fixed cost must be reduced on a pro-rata basis if the 

  vehicle is not used for business purposes for a full year. 

• •The actual distance travelled during a tax year, and the 

  distance travelled for business purposes, substantiated 

  by a logbook, are used to determine the costs that may be 

  claimed against a travelling allowance. 

Alternatively:

Where an allowance or advance is based on the actual distance

travelled by the employee for business purposes, no tax is

payable on an allowance paid by an employer to an employee,

up to R4.76 per kilometre, regardless of the value of the vehicle.

However, this alternative is not available if other compensation

in the form of an allowance or reimbursement (other than for

parking or toll fees) is received from the employer in respect

of the vehicle

• •The first R100 000 of property donated in each year by a 

  natural person is exempt from donations tax. 

• •In the case of a taxpayer who is not a natural person, the 

  exempt donations are limited to casual gifts not exceeding 

  R10 000 per annum in total. 

• •Dispositions between spouses, South African group 

  companies and donations to certain public benefit 

  organisations are exempt from donations tax. 

Securities Transfer Tax

The tax is imposed at a rate of 0.25 % on the transfer of listed

or unlisted securities. Securities consist of shares in companies

or members’ interests in close corporations.

Skills Development Levy (SDL)

An SDL is payable by employers at a rate of 1% of the total

remuneration paid to employees. Employers that pay an annual

remuneration of less than R500 000 are exempt from paying

skills development levies.

Unemployment Insurance Contributions

Unemployment insurance contributions are payable monthly

by employers, based on a contribution of 1% by employers

and 1% by employees, based on the employees’ remuneration

below a certain amount.

Employers that are not registered for PAYE or SDL must pay the

contributions to the Unemployment Insurance Commissioner.

SARS INTEREST RATES

BUDGETHighlights

• •Personal income tax rebates and 

  tax brackets are not adjusted. 

   

• •VAT rate increases from 15% 

  to 15.5% on 1 May 2025 and to 

  16% on 1 April 2026. 

   

• •VAT zero-rating introduced on 

  specific edible offal, specific meat 

  cuts, unflavoured dairy liquid blends 

  and specific canned vegetables to 

  assist poor households. 

   

• •Increase of 6.75% in excise duties 

• on alcoholic beverages.

   

• •Increase of 6.75% in excise duties on 

  cigars and pipe tobacco and 4.75% 

  on cigarettes and other tobacco 

  products. 

   

• •No change to the general fuel 

  levy and road accident levy. 

   

• •Transfer duty is adjusted for 

  the effect of inflation. 

   

• •No ad valorem excise duty on 

  lower value smartphones. 

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(The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available are for general informational purposes only)