Income Tax
Mathematical Literacy
Grade 12
Presented By: M Mlotshwa
Sequence and Series
1. Taxable Income 6. How To Calculate
Income Tax
5. Medical Credits
2. Tax Threshold
3. Income Tax Table 4. Rebates
1. Taxable Income
Income Tax is defined as a compulsory payment to the state, which is deducted from person or business’
earnings for the state to provide services to its citizens
𝑻𝒂𝒙𝒂𝒃𝒍𝒆 𝑰𝒏𝒄𝒐𝒎𝒆 = 𝑮𝒓𝒐𝒔𝒔 𝒊𝒏𝒄𝒐𝒎𝒆 − 𝑫𝒆𝒅𝒖𝒄𝒕𝒊𝒐𝒏𝒔
𝑮𝒓𝒐𝒔𝒔 𝑰𝒏𝒄𝒐𝒎𝒆 = 𝑩𝒂𝒔𝒊𝒄 𝑺𝒂𝒍𝒂𝒓𝒚 × 𝟏𝟐 + 𝑩𝒐𝒏𝒖𝒔 Bonus is only added when mentioned
Tax deductible expenses include contributions to a pension/provident funds, UIF and donations.
Pension Fund- 7,5% of your basic salary is contributed towards a pension fund and is tax-deductible.
𝑷𝒆𝒏𝒔𝒊𝒐𝒏 𝒇𝒖𝒏𝒅 = 𝑮𝒓𝒐𝒔𝒔 𝑰𝒏𝒄𝒐𝒎𝒆 × 𝟕. 𝟓 %
UIF -Unemployment Insurance Fun: A government-run insurance fund which employers and employees
contribute to, so that when employees are retrenched, they can collect some earnings
𝑼𝑰𝑭 = 𝑮𝒓𝒐𝒔𝒔 𝑰𝒏𝒄𝒐𝒎𝒆 × 𝟏%
Donations -The maximum amount allowed for tax deduction is R100 000.
2. Tax Threshold
The Minimum Gross Income Amount one needs to be
liable to pay tax
Anyone who earns less than this amount does not have to
pay tax.
The Persons age
determines the
minimum
requirement to be
liable to pay tax
Example: A person who is 60 years old and earns less than
R83 100 does not have to pay tax.
3. Income Tax Table
Income tax is calculated on a sliding scale. This means that the entire salary is not taxed in the same way, but
rather that certain parts of the salar yare taxed differently . Similarly to how we calculate tariffs!
For persons earning
above the tax threshold.
These are fixed amounts.
They are also the maximum 𝑇𝑎𝑥𝑎𝑏𝑙𝑒 𝑖𝑛𝑐𝑜𝑚𝑒 𝑎𝑏𝑜𝑣𝑒 205 900
of the previous tax brackets Means
𝑇𝑎𝑥𝑎𝑏𝑙𝑒 𝐼𝑛𝑐𝑜𝑚𝑒 − 205 900
𝑻𝒂𝒙 𝑷𝒂𝒚𝒂𝒃𝒍𝒆 = 𝟑𝟕 𝟎𝟔𝟐 + 𝟐𝟔%(𝑻𝒂𝒙𝒂𝒃𝒍𝒆 𝑰𝒏𝒄𝒐𝒎𝒆 − 𝟐𝟎𝟓 𝟗𝟎𝟎)
4. Rebates
Is the relief individuals who pay tax get according to their age
Rebates are fixed amounts deducted (taken off) from your annual tax payable.
• Everyone qualifies for the PRIMARY rebate.
• People 65 and over qualify for the PRIMARY and SECONDARY rebates.
• People 75 and over qualify for the PRIMARY, SECONDARY and TERTIARY rebates
Rebates are subtracted AFTER you have calculated the annual tax payable.
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5. Medical Credits
Medical tax rebates are received by the main member (The person who pays the medical aid).
The medical Credit is based on monthly Payment therefore the total medical credits must be multiplied
by 12
• This rebate gets deducted AFTER the annual tax payable has been calculated.
• The medical tax credit allocated for the first dependent equals that of the main member, every
member thereafter has the same different medical tax credit.
𝑴𝒆𝒅𝒊𝒄𝒂𝒍 𝑪𝒓𝒆𝒅𝒊𝒕𝒔 × 𝟏𝟐
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6. How to Calculate Income Tax
Step 1: Calculate Taxable Income → 𝑻𝒂𝒙𝒂𝒃𝒍𝒆 𝑰𝒏𝒄𝒐𝒎𝒆 = 𝑮𝒓𝒐𝒔𝒔 𝒊𝒏𝒄𝒐𝒎𝒆 − 𝑫𝒆𝒅𝒖𝒄𝒕𝒊𝒐𝒏𝒔
Step 2: Check if the person qualifies to pay tax by using tax threshold table
Step 3: Identify Tax Bracket and Calculate Tax Payable Amount
Step 4: Calculate Rebates. Remember: check the age of the individual to see which rebate(s)
they qualify for
Step 5: Calculate Medical Credits
Step 6: determine the monthly income tax, divide the answer by 12
𝑻𝒂𝒙 𝑷𝒂𝒚𝒂𝒃𝒍𝒆 − 𝑹𝒆𝒃𝒂𝒕𝒆𝒔 − 𝑴𝒆𝒅𝒊𝒄𝒂𝒍 𝑪𝒓𝒆𝒅𝒊𝒕𝒔
𝑴𝒐𝒏𝒕𝒉𝒍𝒚 𝑰𝒏𝒄𝒐𝒎𝒆 𝑻𝒂𝒙 =
𝟏𝟐
