Anna Rich
AS AN individual taxpayer, you will be aware of the marginal tax brackets – from 0% through 18%, 26%, 31%, 36%, 39%, 41% to 45% – that apply to taxable income.
If, for example, your income is R400 000 a year, you’re within the R321 601 to R445 100 band for the 2020/21 year, and your marginal rate is 31%.
However, it is a common misconception that this percentage is applied to your entire income; the 31% rate applies only to the last “stepped” portion of it.
A useful metaphor for understanding how this works is to think of the bands in the South African Revenue Service (Sars) tax table (as published on its website) as rising water encroaching on a basement staircase about to be flooded,…