National Treasury and the South African Revenue Service have published the 14th annual edition of the Tax Statistics, providing an overview of tax revenue collections and tax return information for the 2017 to 2021 tax years.
Revenue collections in the 2020/21 fiscal year were severely impacted by the Covid-19 pandemic lockdown restrictions and an already struggling economy that contracted by 7% in 2020, the revenue service said.
As a result, total tax revenue collections for 2020/21 declined by 7.8% to R1 249.7 billion from the R1 355.8 billion previously.
Personal Income Tax (PIT) at 39.1%, Corporate Income Tax (CIT) at 16.4% and Value-added Tax (VAT) at 26.5%, in aggregate remain the largest sources of tax revenue and comprise 81.9% of total tax revenue collections, SARS said.
The tax-to-GDP ratio moderated from 23.8% in 2019/20 to 22.5% in 2020/21. This was mainly due to annual reductions in the revenue collected from personal income tax, value-added tax, and domestic specific excise duties, the tax specialist said.
It noted that the number of individuals registered for income tax increased to 23.9 million in 2020/21 from 22.9 million in 2019/20. T
his represents a year-on-year growth of 4.1%; and by the end of March 2020 there were 2.5 million registered companies (of which about 832,306 submitted income tax returns) and 880,553 registered VAT vendors of which 448,361 (50.9%) were active.
SARS said it received more than 19.0 million employees’ tax certificates (IRP5s and IT3(a)s) that could be linked to nearly 13.6 million individuals.
Assessed data for individual taxpayers indicated that, of the 5,418,820 taxpayers expected to submit returns for the 2019/20 tax year, 5,213,796 (96.2%) have been assessed (based on data available at the end of September 2021)
The assessed taxpayers had an aggregate taxable income of R1.8 trillion and a tax liability of R407.2 billion. Their average tax rate was 22.4% compared to 22.3% in the previous tax year.
According to the table below, the number of 6,369,806 individuals are estimated to have received taxable income below the minimum income tax threshold of R70,000 while 7,643,157 taxpayers are estimated to have received taxable income above the minimum income tax threshold.
For 2020, 80.7% of the assessed individual taxpayers had a taxable income below R500,000, i.e. most of the taxpayers fell below the tax return submission threshold. These taxpayers earned 46.5% of the total taxable income and contributed 27.4% of the tax assessed.
A further 19.3% of the taxpayers earned taxable income above the R500,000 threshold in 2020 and were liable for 72.6% of the tax assessed.
The number of taxpayers assessed in the income brackets higher than R350,000 continues to grow, said SARS. This is mainly due to above-inflation adjustments to salaries as well as improved compliance, it said.
The R350,001 to R500,000 income tax bracket increased by 80,772 taxpayers (11.6%) between the 2017 and 2020 tax years while the upper-income bracket grew by 221,770 taxpayers (28.3%) during this period.
For high-income earners, 242,231 people earned over R1 million, representing 4.6% of the total.
- 191,370 taxpayers earned between R1 million – R2 million
- 42,868 banked between R2 million – R5 million
- 7,993 individuals earned above R5 million