Salary Tax Applicable for the 2009/2010 Tax Year

At the 2009/2010 Budget Speech government has announced a reduction in personal income tax to give South African citizens more money in their pockets. That means your salary tax would be less this year than last year. How you would be paying less tax on your salary, you might be asking. Here is the answer.

First we need to take a look at the inflation rate. In December 2008 the inflation rate was 10.3%. Economists expected it would drop to between 7 and 8% during January and February 2009.

But let's put things into perspective. Assuming you earned a salary of R122 000 per annum during the 2008/2009 tax year, and the tax rate is 18% for every R1 earned, your annual taxes payable would be: R21 960 – R8 280 = R13 680.

Let's go one step further. Using the same example as above, based on the 2009/2010 tax year calculation and you received an 8% increase in salary you would earn a salary of R131 760 per annum. The tax rate would be 18% for every R1 earned i.e. R23 716 – R9 756 = R13960.

The calculation would be as follows:

• Your income increased from R122 000 to R131 760 – 8% increase

• Your annual tax increased from R13 680 to R13 960 – 2% increase

• Rebate increased from R8 280 to R9 756 – 18% increase

• That means your net income increased from R108 320 to R117 800 – 9% increase.

In conclusion your salary tax for the year 2009/2010 is less than the previous year, and you have 9% more money in your pocket. How? Because with a projected inflation rate for February 2009 of 8% your net income have increased above the inflation rate. (8% inflation rate vs. 9% net income.)

Salary Tax Calculator for the 2009/2010 Tax Year (1 March 2009 – February 2010)

Primary Rebate R9 756
Additional Rebate (Persons 65 and older) R5 400

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