If I have a job and a side business in South Africa, how does tax work?

Your employment income and side business profit are added together to calculate your total taxable income. Your employer deducts PAYE from your salary. You must register as a provisional taxpayer and pay tax on your side income in two payments per year — due 31 August and 26 February. Business expenses reduce your taxable profit.

Do I pay tax on my side income if I reinvest it back into the business?

Yes. SARS taxes profit — revenue minus allowable expenses. Reinvesting profit into the business (buying equipment, stock) reduces your profit only if those purchases are business expenses. But keeping money in a business bank account without spending it does not reduce your tax — you still owe tax on that profit.

Is equipment I buy for my side business tax deductible?

Yes, but not all at once. Equipment is depreciated over its useful life using SARS wear and tear tables. For example, a R10,000 sewing machine might be deducted over 3 years (R3,333 per year). Small items under R7,000 can usually be fully deducted in the year of purchase.

If I make R15,000 per month from a side business, how much tax will I owe?

It depends on your salary. If you earn R40,000/month salary plus R15,000/month side profit, your total annual taxable income is R660,000. After rebates, you would owe approximately R182,840 in total tax. Your employer pays most of this via PAYE. You would owe approximately R60,000–R70,000 extra through provisional tax — about R30,000–R35,000 per six months.

arrow_back Irhafu ne-SARS

Tax Guide

Tax on Side Income South Africa — How It Works When You Have a Job and a Business

You have a salary. You also earn money from a side hustle — selling products, freelancing, renting out a room. Most people assume their PAYE covers everything. It doesn't. Here is exactly how tax works when you have both.

warning

Your employer's PAYE only covers your salary. Side income is your responsibility. If you earn more than R30,000/year from your side business and don't register for provisional tax, SARS will charge penalties and interest — often discovered years later during a tax audit.

The golden rule: SARS taxes total income

SARS does not tax your salary and side business separately. They combine everything into one taxable income figure and apply the tax brackets to the total. This matters because it can push you into a higher tax bracket.

Simple example

Annual salary (R40,000/month)R480,000

Side business profit (R15,000/month)R180,000

Total taxable incomeR660,000

Tax rate on the side income portion36% (bracket for R530K–R696K)

Without side income, your marginal rate was31%

The side income pushed you into the 36% bracketextra R15,000 tax per R100K

Business expenses reduce your taxable profit

You don't pay tax on your total revenue — you pay tax on your profit (revenue minus allowable expenses). This is where most side hustlers leave money on the table by not claiming everything they're entitled to.

check_circleMaterials and stock — leather, fabric, components, packaging — fully deductible

check_circleEquipment and tools — sewing machines, cutting tools, computers — deducted over useful life (wear and tear)

check_circleHome workspace — if you have a dedicated room for the business, a proportion of rent/bond, electricity, and internet is deductible

check_circleVehicle — if you use your car for business (deliveries, collections), keep a logbook and claim the R4.84/km SARS rate

check_circlePackaging and postage — fully deductible

check_circleAdvertising — website hosting, social media ads, business cards — fully deductible

check_circleProfessional services — accountant fees, legal advice relating to the business — deductible

cancel

You cannot deduct: Personal expenses, meals and entertainment (unless for clients with a legitimate business purpose), fines or penalties, capital expenses in full (must be depreciated). Always keep receipts — SARS can audit you for 5 years.

Equipment: wear and tear deductions

Large equipment is not deducted all at once — it is spread over its useful life. This is called a wear and tear (depreciation) deduction. SARS publishes a table of asset lifespans.

Asset type	SARS lifespan	Annual deduction on R10,000 item
Computers and laptops	3 years	R3,333/year
Machinery and tools	5 years	R2,000/year
Furniture	6 years	R1,667/year
Motor vehicles	5 years	R2,000/year
Small items under R7,000	Immediately	Full amount in year 1

lightbulb

Items under R7,000 can usually be deducted fully in the year of purchase. For your leather business, most hand tools and small equipment likely qualify for immediate deduction.

Does reinvesting profit avoid tax?

This is one of the most common misconceptions. The short answer is: not directly. Here is the truth:

check_circle

Spending profit on business expenses DOES reduce tax

If you reinvest profit by buying more leather, tools, or equipment — those are business expenses that reduce your taxable profit. You pay tax on less money. This is the correct and legal way to reduce your tax bill.

cancel

Keeping profit in your bank account does NOT reduce tax

If you earn R180,000 profit but only draw R30,000 as a salary and leave R150,000 sitting in your business bank account, SARS still taxes the full R180,000 profit. Keeping money in a bank account is not a deductible expense.

info

As a sole proprietor, there is no "salary" to yourself

As a sole proprietor, you do not pay yourself a salary — you simply draw money from the business. Your taxable income is your profit, regardless of how much you draw. (A Pty Ltd works differently — the company can pay you a salary which is a company expense, but you then pay personal income tax on that salary.)

The provisional tax you need to pay

Because your side income is not taxed through PAYE, you must pay provisional tax twice a year. See our full guide: Provisional Tax — What It Is and How to Pay It

SARS eFiling

First payment

31 Aug 2026

Second payment

26 Feb 2027

Penalty if missed

10% + interest

Worked example: leather side business + engineering salary

Let's use the exact scenario from the Reddit question: engineer earning R45,000/month salary who starts making R15,000/month profit from a leather business.

Annual engineering salaryR540,000

Annual leather business revenueR360,000

Less: materials and expenses (est.)−R180,000

Business profitR180,000

Total taxable incomeR720,000

Gross tax on R720,000~R222,780

Less primary rebate−R17,820

Less estimated PAYE paid by employer−R145,000

Approximate provisional tax owed~R59,960

Per provisional payment (÷2)~R29,980

This is an estimate. Your actual figure depends on exact income, all business expenses, pension contributions, medical aid credits, and exact PAYE deducted. Use a tax practitioner for accuracy.

Frequently asked questions

Your employment income and side business profit are added together. Your employer covers your salary tax via PAYE. You register as a provisional taxpayer and pay tax on your side income in two installments — August and February. Business expenses reduce your taxable profit.

Only if the reinvestment counts as a business expense (buying materials, equipment, advertising). Simply leaving money in a bank account does not reduce your tax — SARS taxes profit, not drawings.

Yes — deducted over its useful life using SARS wear and tear rates. Items under R7,000 can usually be fully deducted in the year of purchase. Keep all receipts.

Keep all invoices, receipts, and bank statements for at least 5 years. Record every income transaction and every business expense. A simple spreadsheet works — you do not need accounting software to start.

For your first year with a side business, a registered tax practitioner is strongly recommended. They can ensure you claim all deductions correctly, register you for provisional tax, and save you more than their fee in avoided penalties. You can find a registered practitioner at sars.gov.za.

Key contacts

SARS helpline: 0800 00 7277
Register provisional tax: efiling.sars.gov.za
Find a tax practitioner: sars.gov.za/practitioner-lookup

Provisional Tax

Deadlines and how to pay

PAYE Calculator

Estimate your total tax

Udinga uncedo ngesibonelelo sakho?

Thetha nochwepheshe wezimali wendawo — simahla

Fumana Uncedo

This guide provides general information only. Tax rules, bank fees, and regulations change — always verify with SARS, your bank, or a registered tax practitioner. Mzansi Money Guide is independent.