How long did you work this year to pay the taxman?

This article looks at how long we work for the taxman in SA, metaphorically speaking.

Assuming you don’t work on weekends or public holidays, you have 250 work days for which you’ll be paid this year (including annual leave pay).

The tax threshold is R75 750/year for people under 65 this year, which is just above R6 300/month. This means anyone earning R6 300 a month or less will pay no tax and don’t spend time working for government.

However if you earn:

R10 000/month, you pay R7 900 in tax this year and 17 of your 250 working days were spent working to pay tax to government. Since then you’ve worked for yourself.

R25 000/month, you spent 41 work days working to pay just under R50 000 in income tax.

R50 000/month, you pay just over R153 000 in tax; it took 64 working days to pay tax.

R100 000/month, you’ll spend 83 working days to pay just under R400 000 in income tax.

R1.14 million to R4 million, you’ll have completed your tax days sometime in May.

Earning over R4 million, you’ll spend at least 103 working days paying income tax.

By June 14 everyone, including those with ultra-high incomes, will have finished working to pay income tax.

Contributing to retirement funds reduces tax working days.

For example, earning R50 000/month you’ll have 64 tax working days. If you put 15% of your taxable income into a retirement fund, eg retirement annuity (RA), you reduce your tax days from 64 to 50 tax days. In this example, contributing 15% to an RA reduces your tax work days 22% because you’ve reduced your income tax 22%.

You’re currently able to contribute 27.5% of your taxable income towards an RA, limited to R350 000 for the year.

This is a great example of where it’s valuable to pay yourself first using retirement funds.

This article doesn’t constitute financial advice. Tax figures have been rounded off.

Paul Leonard is a CFP and regional head: E Cape at Citadel