A tax rebate is an amount SARS allows every individual taxpayer to subtract from their calculated tax. It is age-based: a primary rebate for all, a secondary rebate added from age 65, and a tertiary rebate added from age 75.
What it means
Rebates reduce tax after it is calculated, not the income it is calculated on. Once the annual tax tables give a figure, the applicable rebates are subtracted, which is what makes the first slice of income effectively tax-free. Older taxpayers get larger total rebates and so a higher tax-free amount.
Where it fits in
In PAYE, the annualised balance of remuneration is run through the tax tables, then the age-based rebate is deducted before dividing back to the pay period. The rebates are what produce the tax threshold below which no tax is due, and they are updated by SARS each tax year.
Key rules
- A fixed amount subtracted from calculated tax, not from income.
- Primary rebate for all; secondary added at 65; tertiary added at 75.
- Applied after the tax tables, each pay period in the PAYE calculation.
- Set by SARS per tax year and the basis of the tax threshold.
