Proposed Changes to the Donations Tax Exemption Between Spouses

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South African couples have long been able to transfer property between spouses free of donations tax, regardless of where either spouse lives for tax purposes. A draft amendment currently before Parliament proposes to end that blanket exemption where the receiving spouse is not a South African tax resident, with an effective date reaching back to February 2026.

If you or your spouse are not both South African tax residents, or you have plans to transfer property between spouses, this is worth understanding now rather than after the fact. At PATC we have been guiding South Africans through their tax affairs for over three decades, and here is what the proposed change means.

The current exemption

Under Section 56(1)(a) and (b) of the Income Tax Act 58 of 1962, donations of property to, or for the benefit of, a donor’s spouse are currently fully exempt from donations tax. This exemption applies regardless of the receiving spouse’s South African tax residency status.

What Clause 17 proposes to change

Clause 17 of the Draft Taxation Laws Amendment Bill (2026) proposes to narrow this exemption. Under the proposed amendment, the exemption would only apply where the receiving spouse is a South African tax resident.

In practice, this means transfers of property made to, or for the benefit of, a non-resident spouse would no longer automatically qualify for the spousal exemption and would instead be subject to donations tax.

The bill is still going through the legislative process. Public comments were invited and closed on 28 August 2026, after which the proposal moves through Parliament’s ordinary consideration before it can become law. It is not yet enacted.

The proposed effective date

If the amendment is enacted as drafted, it will apply retrospectively to qualifying donations made from 25 February 2026. This means donations made between that date and the date the bill is eventually passed could fall within the new rules once it takes effect, even though the change was not yet law when the donation was made.

Current donations tax rates

Donations tax is levied under Section 54 of the Income Tax Act at the following rates:

  • 20% on the aggregate value of taxable donations up to R30 million; and
  • 25% on the value of taxable donations exceeding R30 million.

These are the rates that would apply to a donation that no longer qualifies for the spousal exemption under the proposed change.

Who would be affected

  • South African tax residents with non-resident spouses who are planning to transfer property to, or for the benefit of, their spouse going forward.
  • South African tax residents who have already made donations of property to a non-resident spouse from 25 February 2026 onward, ahead of the amendment being passed into law. If enacted with retrospective effect, these donations could become subject to donations tax.

Why the change is being proposed

The stated purpose of the amendment is to close a planning opportunity: using donations between spouses to move assets out of the South African tax net without triggering donations tax, including as a way of reducing the tax consequences that would otherwise arise from a spouse ceasing South African tax residency.

What this means for you

Because the proposed effective date sits in the past relative to when the bill will actually be passed, South African tax residents with a non-resident spouse should treat this as a live planning issue now, not something to wait on. Any property transfer to a non-resident spouse made or contemplated since 25 February 2026 deserves a proper review of the donations tax exposure it may create.

Frequently asked questions

Is this change already law?

No. It is a proposal in the Draft Taxation Laws Amendment Bill (2026). Public comments closed on 28 August 2026, and the bill must still complete the parliamentary process before it can be enacted.

Does this affect donations between spouses who are both South African tax residents?

No. The proposed change only affects donations to, or for the benefit of, a spouse who is not a South African tax resident. Donations between two South African tax resident spouses would remain fully exempt.

If I already donated property to my non-resident spouse this year, am I affected?

Potentially, if the amendment is enacted with the proposed retrospective effective date of 25 February 2026. We recommend reviewing any such transfers with your accountant.

What rate of donations tax would apply if the exemption falls away?

20% on the aggregate value of taxable donations up to R30 million, and 25% on any value above that, under Section 54 of the Income Tax Act.

What should I do while the bill is still going through Parliament?

Treat any planned or recent property transfer to a non-resident spouse as needing review. The retrospective effective date means waiting for the bill to be finalised does not remove the risk.

Let PATC review your position

If you or your spouse are not both South African tax residents and property has changed hands, or is about to, we can review the position against this proposal and the current rules and help you plan accordingly.

Call 031 702 8112 or email info@patc.co.za to speak to our team about your tax position.

Research for this article was prepared by Rejoice Makotose, Trainee Accountant at PATC.

South African Tax Residency and the Foreign Employment Income Exemption

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Moving abroad for work is not the same thing as leaving the South African tax system. Many South Africans working overseas assume that once they are out of the country, or once they stop applying for local jobs, SARS no longer has an interest in their income. That is not how it works, and getting it wrong can be an expensive mistake.

At PATC we help South Africans working locally and abroad manage their tax obligations correctly. Here is how South African tax residency, worldwide income and the foreign employment exemption fit together.

South Africa taxes residents on worldwide income

South Africa operates a residence-based tax system. If you are a South African tax resident, you are generally liable for South African income tax on your worldwide income, subject to applicable exemptions, deductions, foreign tax credits and any relevant Double Tax Agreement.

Simply leaving South Africa to work overseas does not, on its own, mean you have ceased to be a South African tax resident. Tax residency is determined by your individual circumstances, principally whether you remain ordinarily resident in South Africa. Your formal immigration status in another country is a separate question from your South African tax residency, and the two do not necessarily move together.

If you remain a South African tax resident, your foreign income remains relevant for South African tax purposes, even while you are working outside the country.

The foreign employment income exemption

A separate exemption exists for foreign employment income earned by a South African tax resident, under Section 10(1)(o)(ii) of the Income Tax Act. This exemption does not change your residency status. It simply allows qualifying foreign employment income to be exempt from South African tax, provided certain physical-presence requirements are met.

To qualify, you must render services outside South Africa for:

  • More than 183 full days in aggregate, during any 12-month period; and
  • More than 60 continuous full days, within that same 12-month period.

The 183 days do not need to be consecutive and can be built up over several trips within the 12-month period. The 60-day requirement is different: those days must run continuously.

Example

An employee spends 90 days outside South Africa, returns home, and later spends a further 100 days outside South Africa. That totals 190 days outside South Africa in aggregate, satisfying the 183-day requirement. If at least one of those trips included more than 60 consecutive full days outside South Africa, the physical-presence requirements for the exemption are met.

The R1.25 million exemption limit

Meeting the physical-presence test does not mean all of your foreign salary is automatically tax-free. The foreign employment income exemption is currently capped at R1.25 million per year of assessment.

  • Foreign employment income of R800,000: the full amount may qualify for the exemption, provided all other requirements are met.
  • Foreign employment income of R1,500,000: R1,250,000 may qualify for the exemption; the remaining R250,000 may be subject to South African tax.
  • Foreign employment income of R2,000,000: R1,250,000 may qualify for the exemption; the remaining R750,000 may be subject to South African tax.

Two separate questions, not one

Tax residency and the foreign employment exemption are commonly confused, but they are two distinct questions that need to be worked through in order.

Step 1: Are you still a South African tax resident? If yes, your worldwide income generally remains within the South African tax system.

Step 2: Does your foreign employment income qualify for the exemption? If you remain a South African tax resident and you earn employment income while working outside South Africa, check whether you meet the Section 10(1)(o)(ii) requirements: more than 183 full days outside South Africa in aggregate, including more than 60 continuous full days, within a 12-month period. If so, the qualifying income may be exempt, up to the R1.25 million annual limit.

An important distinction

Spending more than 183 days outside South Africa does not automatically make you a non-resident for tax purposes. Equally, not having formally immigrated elsewhere does not automatically mean you remain a South African tax resident. These are separate determinations:

  • Tax residency: has your ordinary residence in South Africa actually ceased?
  • Foreign employment exemption: if you remain a South African tax resident, does your foreign employment income meet the Section 10(1)(o)(ii) requirements?

Deliberately ceasing South African tax residency is a separate process with its own determination and potential exit-tax consequences, and is not triggered simply by time spent working abroad.

Frequently asked questions

If I work overseas for more than 183 days, does that make me a non-resident?

Not automatically. The 183-day/60-day rule relates to the foreign employment income exemption, not to your tax residency status. Residency is assessed separately, based on your individual circumstances.

I have not formally immigrated. Does that mean I am still a South African tax resident?

Not necessarily. Immigration status and tax residency are assessed under different tests. You should have your residency position formally reviewed rather than assuming either way.

Is all of my foreign salary tax-free if I qualify for the exemption?

Only up to R1.25 million per year of assessment. Any qualifying foreign employment income above that threshold may be subject to South African tax.

Do the 183 days have to be worked in one continuous stint?

No, only the 60-day requirement must be continuous. The 183 days can be accumulated across multiple trips within the same 12-month period.

What if I want to formally stop being a South African tax resident?

That is a separate process from the foreign employment exemption, involving its own residency determination and potential exit-tax consequences. We recommend professional advice before taking any steps.

Let PATC review your position

Whether you are already working abroad or planning to, getting your tax residency and foreign employment exemption position right protects you from unexpected liabilities and penalties.

Call 031 702 8112 or email info@patc.co.za to have your tax position reviewed by our team.

Research for this article was prepared by Aaliya Cassim, Trainee Accountant at PATC.

Provisional Tax: Your First 2027 Payment Is Due 31 August 2026

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If you earn income over and above a salary, such as rental income, interest, freelance or consulting work, or income from your own business, you are almost certainly a provisional taxpayer. That means your first provisional tax payment for the 2027 tax year is due by Monday 31 August 2026, and late or inaccurate payment carries penalties that are entirely avoidable.

At PATC we have been preparing tax returns and provisional tax submissions for South Africans for over three decades. Here is what provisional tax is, who has to pay it, and what it costs to get it wrong.

What is provisional tax?

Provisional tax is not a separate or additional tax. It is a method of paying your normal income tax in advance, in instalments, rather than in a single amount after your annual assessment. Because income such as rent or freelance earnings has no PAYE deducted from it, SARS collects the tax on that income during the year instead.

You declare an estimate of your taxable income on an IRP6 return, and you pay the tax on that estimate in two instalments: the first halfway through the tax year, and the second at the end of it.

Who must pay provisional tax?

Broadly, you are a provisional taxpayer if you earn income that does not have PAYE deducted from it. That includes people who:

  • Earn rental income from a property
  • Earn interest or investment income above the exemption thresholds
  • Do freelance, consulting or commission work
  • Run their own business or practice
  • Earn any other income over and above a salary

Companies are automatically provisional taxpayers, and trusts that earn income generally are too. If you are unsure whether this applies to you, we recommend confirming your status with a professional rather than assuming.

When is the provisional tax deadline?

The 2027 tax year runs from 1 March 2026 to 28 February 2027. The two IRP6 deadlines are:

  • First payment: Monday 31 August 2026 (the last working day of August)
  • Second payment: end of February 2027

There is also an optional third top-up payment later in the year for taxpayers who want to settle any remaining shortfall before assessment, but the two deadlines above are the compulsory ones. The August payment is the immediate priority.

Getting the estimate right

Your first provisional payment is based on an estimate of your taxable income for the full 2027 tax year, worked out from your actual results so far. The estimate is the heart of the exercise: pitch it too low and SARS can impose an underestimation penalty, pitch it too high and you part with cash you did not need to.

This is where professional preparation matters. Our expert team has completed thousands of provisional tax submissions over more than three decades, stays up to date with the latest changes to the tax rules and SARS requirements, and prepares estimates that are accurate, defensible and tax-efficient. You provide the figures, we do the rest, and you have peace of mind that the deadline is met and the amount is right.

What happens if you underpay or pay late

SARS applies penalties and interest strictly:

  • Late payment attracts an immediate 10% penalty on the amount due, plus interest at the prescribed rate.
  • Underestimating your income can attract an underestimation penalty of as much as 20% of the shortfall.

A shortfall does not resolve itself; penalties and interest continue to accrue until it is settled. All of it is avoidable with a sound estimate, submitted and paid on time.

What we need from you

If you are a PATC client, please send us the following for the period 1 March to 31 July 2026, as soon as possible:

  • Your income figures, including rental, interest, freelance and business income
  • Your deductible expenses for the same period
  • Details of any new or additional income received this year
  • Retirement annuity contributions
  • Anything else that has changed since last year

Do not wait to hear from us first: the sooner we receive your information, the sooner your submission is prepared and paid. If we do not receive updated figures, we will have to base your submission on the latest information we hold, which is rarely the most accurate or the most tax-efficient basis.

Frequently asked questions

I earn a salary and some rental income. Am I a provisional taxpayer?

Almost certainly yes. Earning a salary does not exclude you. It is the rental income, which has no PAYE deducted from it, that brings you into the provisional tax system.

What is an IRP6?

The IRP6 is the return on which a provisional taxpayer declares their estimated taxable income for the year. One is submitted with each provisional payment, via SARS eFiling.

Does provisional tax mean I pay more tax?

No. It is the same income tax you would have paid in any event, paid during the year rather than in a single amount on assessment. Paid correctly, it protects you from penalties and interest rather than adding to your bill.

What if I only earn a small amount of interest?

Interest below the exemption threshold (R23,800 if you are under 65, R34,500 if you are 65 or older) does not trigger provisional tax on its own. If your additional income is genuinely small, you may fall outside the system, but we recommend having this confirmed rather than assumed.

What happens if I miss the 31 August deadline?

A 10% late payment penalty applies to the amount due, plus interest, and a poor estimate can attract a further underestimation penalty of up to 20%. If you expect to miss the deadline, contact us immediately; acting before the deadline can materially reduce the cost.

Let PATC handle your provisional tax before the deadline

Send us your figures for the period to 31 July and we will prepare the estimate, complete the IRP6, and submit it accurately and on time.

If you are not yet a PATC client, this is a good time to put your provisional tax in professional hands. We offer a complimentary one-hour discovery call to review your position and explain what the work involves. T’s and C’s apply.

Call 031 702 8112 or email info@patc.co.za before 31 August 2026, and let us get your provisional tax done right.

PATC – Professional Accountants and Tax Consultants. Your Partner in Financial Clarity. www.patc.co.za

SARS Auto-Assessment 2026: What to Check Before You Accept

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SARS has auto-assessed millions of South Africans this Filing Season, and for most people the instinct is to tap accept and move on. It is quick, the refund often lands within days, and it feels like one less thing to worry about. But a SARS auto-assessment is only ever as complete as the information SARS already holds, and that information has real gaps. Accept it without checking and you can quietly leave money on the table, or worse, leave income undeclared that SARS catches up with later.

At PATC we have been preparing tax returns for South Africans for over three decades, and every Filing Season we see the same avoidable outcomes. Here is what a SARS auto-assessment actually is, the checks worth doing before you accept, and what to do if you have already accepted.

What is a SARS auto-assessment?

A SARS auto-assessment is a pre-populated tax return that SARS generates on your behalf using data submitted directly to it by third parties. Your employer submits your IRP5. Your medical aid reports your contributions. Retirement funds report contributions made through your employer. Banks report interest, and from this year investment income is pre-populated too.

Where your tax affairs fit neatly inside that ecosystem, the assessment can be reasonably accurate. The problem is everything SARS cannot see: the retirement annuity you pay into directly, the home office you run, the logbook behind your travel allowance, and the rental or freelance income that never passes through a payroll. None of that appears automatically, and none of it is SARS’s job to chase. That responsibility is yours.

Should you accept your SARS auto-assessment?

Only after you have checked it. An assessment being issued is not the same as it being accurate. Before you accept, run through the five checks below. If everything matches and nothing is missing, accepting is perfectly fine. If something is missing, you will want to file a corrected return instead.

5 checks to make before you accept your auto-assessment

1. Your IRP5

Check that the salary, PAYE, and source codes on the assessment match your payslips and your own IRP5. A single mismatched code can change the outcome.

2. Medical aid contributions and out-of-pocket expenses

The assessment will usually reflect your scheme contributions, but it will not include qualifying out-of-pocket medical expenses you paid yourself. Prescriptions, treatments, and costs your scheme did not cover can add up, particularly where they exceed the 7.5% of taxable income threshold.

3. Retirement annuity contributions

This is the single most commonly missed deduction. Contributions to a workplace pension or provident fund usually appear on your IRP5, but contributions to a separate retirement annuity, direct top-ups, and amounts you paid outside your employer’s payroll often do not. If you changed jobs, switched providers, or contributed on your own during the year, check this carefully and make sure the contribution certificate is accounted for.

4. Travel allowance

Where you received a travel allowance (source code 3701), you can only claim against it with a proper logbook. No logbook, no claim, and the allowance simply gets taxed. If you kept one, make sure the claim is reflected.

5. Side income

Rental income, freelance work, consulting, and side hustles must be declared even though SARS has no automatic record of them. This is the flip side of the coin: miss a deduction and you overpay, but miss income and SARS eventually comes knocking, usually with penalties attached.

A note on the retirement annuity deduction limit

There has been some confusion doing the rounds online, so it is worth being precise. For the 2026 Filing Season, you are filing your return for the tax year that ran from 1 March 2025 to 28 February 2026. For that year, retirement fund contributions are deductible up to 27.5% of the greater of your remuneration or taxable income, capped at R350,000.

The higher R430,000 cap that you may have seen mentioned only takes effect from 1 March 2026, which is the 2027 tax year. It is excellent news for your planning going forward, but it does not apply to the return in front of you now.

Already accepted your auto-assessment? You can still fix it

Accepting a SARS auto-assessment is not the end of the road. Where you have since spotted a missing deduction, or income that should have been declared, you can submit a corrected ITR12 through SARS eFiling.

For non-provisional individual taxpayers, the window to file or correct your return runs until 23 October 2026. Provisional taxpayers have until 22 January 2027. Filing a correction sooner rather than later gives SARS time to process any additional refund and leaves room to respond if anything is flagged for verification.

Frequently asked questions

Do I have to accept my SARS auto-assessment?

No. If the auto-assessment is incomplete or incorrect, you can file a corrected ITR12 instead of accepting it. If it is complete and accurate, you can accept it as is.

What happens if I do nothing?

If you take no action, SARS generally treats the auto-assessment as final after the filing deadline. That is why it is important to review it rather than ignore it, in case deductions or income are missing.

Can I still claim deductions after being auto-assessed?

Yes. You can add missing deductions such as retirement annuity contributions, out-of-pocket medical expenses, home office costs, and travel claims by submitting a corrected return before the deadline.

When is the 2026 tax filing deadline?

Non-provisional individual taxpayers have until 23 October 2026. Provisional taxpayers have until 22 January 2027.

Is the retirement annuity cap R350,000 or R430,000?

For the 2026 Filing Season (2025/26 tax year) the cap is R350,000. The R430,000 cap applies from 1 March 2026 (the 2027 tax year) onward.

Let PATC review your auto-assessment before you accept

A tax return is one of those things that is easy to get slightly wrong and expensive to fix afterwards. Where you want a professional to review your auto-assessment against your actual situation, catch the deductions you are entitled to, and make sure nothing is left undeclared, that is exactly what we do.

PATC offers a complimentary one-hour discovery call to talk through your position, tell you honestly what the work involves, and quote fairly. T’s and C’s apply. You can also book your free consultation online in under a minute.

Call 031 702 8112 or email info@patc.co.za, and let us make sure your assessment is right before you accept it.

PATC – Professional Accountants and Tax Consultants. Your Partner in Financial Clarity. www.patc.co.za

Thinking of Leaving South Africa? What Most People Get Wrong When Ceasing Their Tax Residency

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If you have moved abroad permanently, or you are planning to, there is one piece of admin that quietly costs people more money than almost anything else they get wrong on their way out. Ceasing your tax residency with SARS.

Until you formally cease tax residency, SARS will continue to treat you as a South African tax resident. Your worldwide income remains in scope. The longer you leave it, the harder it becomes to unwind. We have seen clients who left South Africa years ago, never updated SARS, and only realised the cost when a foreign tax authority started asking questions or a South African bank refused to update their account status.

Ceasing tax residency is not a form. It is a story you have to tell SARS.

There is a form involved. It is called the RAV01, and it sits inside your eFiling profile. But anyone treating this as a paperwork exercise has misunderstood what is actually happening.

When you tell SARS you have ceased to be a tax resident, you are making a factual claim. You are saying that your home is no longer here, that your economic centre has moved, that your ties have been severed. SARS will only accept that claim if the supporting evidence holds together. Your passport stamps, your travel diary, your motivation letter, your foreign residency documentation. All of it has to point in the same direction and tell the same story.

The form is the easy part. The story is where applications stand or fall.

The five things that go wrong

In our experience helping clients through this process, the same handful of mistakes show up again and again. Each one is expensive in a different way.

1. Getting the cessation date wrong

This is the single most consequential decision in the whole process. The date you put on the form determines what income SARS taxes, when capital gains arise on the deemed disposal of your assets, and which tax year your final resident return covers. People often pick the date they physically left the country. SARS may consider a different date entirely, depending on when your tax ties actually broke. Working backwards from a date that has already been submitted is far harder than getting it right the first time.

2. A motivation letter that does not tell SARS what they actually want to know

The motivation letter is the document SARS reads most carefully. It needs to walk them through where you now live, when you left, what ties you have severed, and the legal basis on which you have ceased to be resident. Most letters we see from people who have tried this themselves are too short, too vague, or focused on the wrong facts. SARS then comes back with follow-up questions, and what should have been a clean six-week verification turns into a six-month back-and-forth.

3. Missing supporting evidence

SARS asks for a specific package of documents. Passport copies with all the entry and exit stamps. A travel diary. Sometimes foreign residency certificates, lease agreements abroad, employment contracts. Applications that go in incomplete get sent round in circles. Applications that anticipate what SARS is going to ask for, and include it on first submission, tend to be approved much faster.

4. Ignoring the capital gains tax exit charge

Ceasing tax residency triggers a deemed disposal of certain assets on the day you cease. This can create a real capital gains tax liability that catches people completely off guard, particularly if they hold investments, shares, or property. Planning the cessation date around this charge, rather than ignoring it and hoping for the best, often saves clients significant amounts.

5. Trying to fix it later with the ITR12

If you have already left South Africa and missed the RAV01 step, it is technically possible to declare cessation later on your annual ITR12 return. This route exists, but it is messier. It delays the cessation by a tax cycle and tends to attract more questions from SARS. Anyone with the option should use the RAV01 route from the start.

What it costs to get this wrong

The consequences of a mishandled cessation are not theoretical. They show up in several places at once.

You can end up paying tax in two jurisdictions for years, on income that should never have been in SARS' scope in the first place. You can attract a capital gains liability that proper planning would have softened or avoided. You can find foreign banks and tax authorities refusing to accept your non-resident status because the South African paperwork is incomplete or inconsistent. And if you ever return to South Africa, reinstating your residency on a clean record is far easier than reinstating it on a record full of unresolved queries.

Why this is worth a conversation before you submit anything

The time to talk to a tax practitioner is before you touch the RAV01. Not after SARS has come back with questions. Once a cessation date is on the system and a verification case has been opened, your options narrow. The best outcomes we see are with clients who came to us before they left South Africa, or in the weeks after, so we could shape the application from the start.

This is true for everyone, but particularly for anyone with property left behind in South Africa, anyone with shares or investments that may trigger the CGT exit charge, anyone receiving income from a South African source that will continue after they leave, or anyone who has already left and is unsure whether they have done enough.

How PATC can help

If you are planning to leave South Africa, have already left and have not yet updated SARS, or are unsure whether your situation is properly resolved, we are happy to walk through it with you.

PATC offers a complimentary 1 hour discovery call to look at your circumstances, work out what the right cessation approach is for you, and outline what the application would involve. T's and C's apply.

To book, contact us on 031 702 8112 or info@patc.co.za, or visit www.patc.co.za.

Today's Talent. Tomorrow's Success.

Acknowledgements and further reading

This article draws on the internal guidance prepared by Renisha Arjoon of PATC, who has handled a number of these applications for clients and shaped the practical perspective behind the article.

For the official SARS material on the cessation process:

Can Your Accountant Represent You Against SARS in the Tax Court?

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The short answer is yes. A recent Supreme Court of Appeal ruling has confirmed that your accountant in the Tax Court is now a valid alternative to briefing an attorney or advocate. Your accountant, your tax practitioner, or any other duly authorised person can stand up for you when you take on SARS.

For many of the business owners and individuals who work with us at PATC, this changes the maths on whether it is worth fighting a SARS dispute at all. The cost of running an appeal through a law firm has, for some time, been beyond the reach of the very taxpayers most likely to find themselves on the receiving end of an aggressive assessment. This ruling opens a door that SARS had been trying to keep closed.

What the court decided

In a judgment handed down on 12 May 2026, the Supreme Court of Appeal ruled in favour of a taxpayer whose father, acting under a power of attorney, had been blocked from representing her in the Tax Court because he was not an admitted attorney or advocate. SARS argued that only legal practitioners could appear in the Tax Court. The SCA disagreed and confirmed that a duly authorised non-legal representative may stand in for a taxpayer.

The full legal reasoning is detailed and worth reading if you are interested. The clearest write-ups are at Tax Consulting South Africa and BusinessTech. Moneyweb also covers the back story, which stretches over more than a decade.

What having your accountant in the Tax Court means for you

If you are in dispute with SARS, or thinking about objecting to an assessment, you now have a wider choice of who can represent you. Your accountant or tax practitioner, the person who knows your numbers and the history of your file, can take the matter forward without a lawyer being parachuted in. For most of the smaller and mid-sized matters we see at PATC, that adviser is usually the right person for the job anyway.

This matters because tax disputes have become more frequent and more aggressive. SARS has been increasingly willing to litigate on technical and procedural points. Until this ruling, one of those technical points was simply whether your representative had the right qualification to be in the room. The SCA has now taken that argument off the table.

What it does not change

A few things are worth being honest about.

This ruling clarifies who may represent you. It does not make tax litigation any simpler or any less risky. SARS continues to brief senior counsel and continues to litigate hard. Procedural missteps in a dispute can have lasting financial consequences, and taxpayers are generally bound by the grounds raised in their original objection and appeal. The right representative for your dispute is the one with relevant experience and a clear grasp of the rules. For many of our clients, that is the PATC team. For some matters, a specialist tax attorney will still be the right call. This ruling widens your options. It does not remove the need to choose carefully.

It is also worth noting that SARS may still take the matter on appeal to the Constitutional Court. If that happens and the Constitutional Court overturns or varies the ruling, the position would change. For now, however, the SCA’s judgment stands and may be relied on.

How PATC can help with your accountant in the Tax Court

If you have an active dispute with SARS, an assessment you disagree with, or a SARS audit that has unsettled you, this is a good moment to talk through your options. The recent ruling may have changed what is available to you.

PATC offers a complimentary 1 hour discovery call to discuss your situation, understand the history of your matter, and outline a sensible path forward. T’s and C’s apply.

To book, contact us on 031 702 8112 or info@patc.co.za, or visit www.patc.co.za.

Today’s Talent. Tomorrow’s Success.

Further reading

With thanks to Nicholas Arumugam of PATC for circulating the judgment and the analysis underpinning this article. The case is Commissioner for the South African Revenue Service v Poulter (1110/2024) [2026] ZASCA 68.

EMP501 Annual Reconciliation: Everything Employers Need to Know for the 31 May Deadline

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Your complete guide to a clean submission, with the new Income Tax Reference Number rule, the most common rejection reasons, and what happens if you miss the deadline.

If you employ even one person in South Africa, you have an EMP501 to submit by 31 May. With 31 May falling on a Sunday in 2026, the practical deadline is Friday 29 May. Get it wrong and SARS can charge you up to 10% of your annual PAYE liability. Get it late and your employees cannot file their own tax returns. Here is everything you need to do, and how to do it cleanly.

This guide walks through what the EMP501 is, what makes a clean submission, what is new this year, what to do if your submission is rejected, and how to get back on track if you have already missed the date. It is written for South African employers managing payroll themselves, and for those working with bookkeepers or payroll providers who want to understand what is happening on their behalf.

⚑ IF YOU DO ONE THING THIS MONTH

Get every employee registered for income tax

From the 2026 filing season, SARS will not accept an EMP501 submission unless every employee on it has a valid Income Tax Reference Number. One missing tax number blocks the entire submission.

This is not a per employee rejection. The whole file fails. You can have 499 employees registered and one who is not, and SARS will still refuse to accept your reconciliation. The deadline does not pause while you sort the registration out.

Employee tax registration runs through eFiling or e@syFile Employer using ITREG (single employee) or BundleReg (multiple employees). Both are free. Both can take a few working days to come back. Leaving this for the deadline week is the single biggest avoidable risk in the EMP501 process.

Need help? PATC will register your employees for income tax for a nominal fee, or walk you through it on a complimentary discovery call. Call 031 702 8112. T’s and C’s apply.

What is the EMP501?

The EMP501 is the Employer Annual Reconciliation Declaration. It is the document that ties together three things: your twelve monthly EMP201 declarations, the actual payments you have made to SARS for PAYE, UIF, and SDL, and the IRP5 and IT3(a) tax certificates issued to your employees for the tax year ending 28 February.

Those three figures must reconcile. Where your monthly EMP201s show that R600,000 in PAYE was due over the year, your payment records show R600,000 paid, and your employee certificates total R600,000 in PAYE deducted, your EMP501 reconciles cleanly. Where any of those numbers disagree, SARS knows there is a problem before you do.

The EMP501 covers the full tax year, from 1 March 2025 to 28 February 2026. Submission opens on 1 April and closes on 31 May. The window is two months, although in practice many employers leave it to the final fortnight, which is when the SARS systems become heavily congested.

What is new in 2026

This filing season brings one significant change that catches employers off guard. SARS will reject any EMP501 that contains employees without a valid Income Tax Reference Number.

In previous years, you could submit IRP5 certificates for employees who were not yet registered for income tax, with a placeholder code in the tax number field. From 2026 onwards, that route is closed. Every employee on your reconciliation must have a valid Income Tax Reference Number recorded against their certificate. Where they do not, the entire submission is rejected.

Put another way: no employer can press send on an EMP501 with even one employee missing a valid Income Tax Reference Number. It does not matter how large or small the workforce is. One unregistered employee out of one, ten, or five hundred holds the entire submission back.

This rule was published well in advance, although it has caught out plenty of employers in the first weeks of the filing season. Where you have new employees, casual workers, or anyone hired during the year who has not yet registered for personal income tax, this needs to be sorted out before submission. Two paths are available.

  • Individual Income Tax Registration (Individual ITREG) on SARS e@syFile Employer, for one employee at a time
  • Bundled Income Tax Registration (Bundled ITREG), for multiple employees at once

Both options are free, both run through e@syFile, and both can take a few working days to complete. Leaving this work for the week of the deadline is risky. Sort it out as early as possible.

⚑ SARS Rule: EMP501 submissions without valid Income Tax Reference Numbers for every employee will not be accepted. This is a hard rule, not a warning. Plan registration work for early in the submission window, never the deadline week.

What goes into a clean submission

A clean EMP501 submission has five elements working together. Where any one of them is off, the reconciliation fails.

1. Twelve accurate EMP201 monthly declarations

Each month from March to February should have a corresponding EMP201 declaration showing PAYE, UIF, and SDL liability for that month, plus any ETI claimed. Where you have missed an EMP201 anywhere in the year, that needs to be submitted before the EMP501 can reconcile.

2. Payments matching what was declared

The actual payments you made to SARS each month, excluding penalty and interest payments, must match the totals on your EMP201s. SARS pulls the payment data automatically from their side. Where there is a difference between what you declared and what you paid, the reconciliation will not balance.

3. IRP5 and IT3(a) certificates for every employee

Every employee who earned income from you during the tax year needs an IRP5 (where PAYE was deducted) or an IT3(a) (where it was not). The total PAYE on the certificates must match the total of your monthly EMP201s. Each certificate must include the employee’s valid Income Tax Reference Number.

4. ETI claims supported and reconciled

Where you claimed Employment Tax Incentive during the year, those claims need to be supported by accurate employee data, including dates of employment, ages, and minimum wage compliance. SARS audits ETI claims closely, and incorrect or unsupported claims are clawed back with interest.

5. Submission via e@syFile or eFiling

Most employers submit through SARS e@syFile Employer, which is the dedicated software for employer reconciliations. Smaller employers (with five or fewer certificates) can submit through eFiling. The latest version of e@syFile is required for the 2026 reconciliation. Older versions will not work.

The most common rejection reasons

In a typical filing season, SARS rejects between 10% and 15% of EMP501 submissions on first attempt. The reasons cluster around the same handful of issues.

  • Missing or invalid Income Tax Reference Numbers on employee certificates (the new 2026 rule)
  • EMP201 totals not matching certificate totals (often caused by a missed monthly submission)
  • Payment totals not matching declared totals (often caused by a deferred or split payment)
  • Incorrect ETI claims, including claims for ineligible employees or amounts above the legislated maximum
  • Submitting through an outdated version of e@syFile or eFiling

A rejected submission is treated as not submitted. This matters because the deadline does not pause for a fix. Where you submit on Friday 29 May and the file is rejected over the weekend, the resubmission needs to be in by 31 May, with no working hours available to chase down a missing tax number or a payroll mismatch. Anything submitted after 31 May, even of a corrected file, is treated as late and penalties apply from the original deadline.

The lesson is the same every year. Submit early, leave room to fix what comes back.

What happens if you miss the EMP501 deadline

Late or non submission of an EMP501 carries three layers of cost.

Administrative penalty

SARS can impose a penalty of 1% of the total employee tax for the reconciliation period, charged each month the submission is outstanding, up to a maximum of 10%. For an employer with R1 million in annual PAYE, that is up to R100,000 in penalties alone.

Interest on outstanding amounts

Where the late submission also reveals underpaid PAYE, UIF, or SDL, interest accrues on the outstanding amounts at the prescribed SARS rate, currently around 10.75% per annum. Interest runs from the original due date of the underlying monthly payment, not from the EMP501 deadline.

Blocked employee tax certificates

This is the consequence many employers do not anticipate. Until your EMP501 is submitted and accepted, your employees cannot access their IRP5 certificates on eFiling. That means they cannot file their own tax returns when filing season opens in July. Your compliance failure becomes their problem, and that is a conversation no employer wants to have.

In serious or repeated cases, SARS can also pursue criminal prosecution under the Tax Administration Act, with directors held personally liable. This is rare in practice. The financial penalties alone are usually severe enough to focus the mind.

If you have already missed the deadline

Submit anyway. Submit today. The penalty stops accruing the moment the submission is in. Every additional month the EMP501 remains outstanding adds another 1%, up to the 10% ceiling.

Where the late submission was caused by genuine difficulty, including illness, system failures, or other circumstances outside your control, you can submit a Request for Remission (RFR) to SARS once the EMP501 has been filed. The RFR asks SARS to reduce or remove the penalty. SARS reviews each request individually, and a clear explanation supported by evidence makes a meaningful difference.

What does not work is silence. Ignoring an outstanding EMP501 leads to estimated assessments, escalating penalties, and eventually compliance enforcement. Submitting late is significantly better than submitting never.

Practical timeline for the rest of May

Where you have not yet started, here is a workable plan for the remaining days of the filing window. One important note before the schedule: 31 May 2026 falls on a Sunday. While SARS systems may technically accept submissions over the weekend, the practical deadline for any sensible employer is Friday 29 May. The plan below builds towards that date, with the weekend reserved as a buffer for handling any last minute rejections.

This week

  • Pull your monthly EMP201 records and confirm all twelve are submitted
  • Run an Income Tax Reference Number check on every employee
  • Submit Individual or Bundled ITREG for any employee without a valid number

Next week

  • Generate IRP5 and IT3(a) certificates from your payroll system
  • Reconcile EMP201 totals to certificate totals to payment totals
  • Resolve any differences. Each one is a rejection waiting to happen

Final week

  • Download the latest e@syFile Employer version
  • Import your data and run e@syFile’s built in validations
  • Submit by Friday 29 May. Treat the weekend as a buffer for handling rejections, not as a submission window

How PATC can help

PATC has been managing employer reconciliations for South African businesses for over two decades. Our payroll team handles EMP501 submissions for clients ranging from single employee outfits to companies with hundreds of staff. We know where the system fails, where SARS pushes back, and how to build a submission that goes through cleanly the first time.

Where you would like a hand, the next two weeks are when we can be most useful. Calling us in the final 48 hours before Friday 29 May is often too late, because the resolution time on Income Tax Reference Number registration alone can run to several days. The earlier in May we hear from you, the cleaner the submission we can build.

→ PATC offers a complimentary 1 hour discovery call where we can review your EMP501 readiness, identify gaps, and tell you straight whether you need help to make the deadline. T’s and C’s apply. Call 031 702 8112 or email info@patc.co.za or visit our contact page to book.

Whether you submit yourself or hand it over, the goal is the same. A clean submission, accepted on first attempt, well before the system congestion of the final week. The peace of mind is worth more than the cost of the help.

VAT Threshold Increase to R2.3 Million: What This Means for Your Business

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A Big VAT Threshold Change Has Landed… But Don’t Panic

From 1 April 2026, the VAT registration threshold in South Africa has officially increased from R1 million to R2.3 million. In simple terms, this means many small businesses are no longer required to be VAT registered. At first glance, this sounds like a win. Less admin. Less compliance. Less stress. And yes… in some cases, it can be. However, before making any decisions, it’s important to take a step back and look at the bigger picture. So… should you deregister for VAT? This is where things get a little more nuanced.

Just because you can deregister, doesn’t always mean you should. For some businesses, staying VAT registered is actually more beneficial in the long run.

Here’s why:

  • You can claim VAT back on your expenses
  • If your business has regular costs, this can make a noticeable difference to your cash flow.
  • Furthermore, it can improve your business image
  • Many clients, especially larger companies, prefer working with VAT-registered suppliers.
  • Additionally, it helps with pricing flexibility.

Being VAT registered also allows you to structure your pricing more competitively in certain industries.

What About Businesses Already Registered?

If your business registered for VAT under the old R1 million threshold, everything you’ve done up to now is still completely valid. Moreover, your past VAT submissions, claims, and compliance all remain in place. Nothing gets reversed. There’s also no automatic deregistration — the choice to stay registered or deregister is entirely yours. For more official detail on VAT registration requirements, you can refer to the SARS VAT page.

The Part Most People Don’t Talk About

Here’s something that often catches businesses off guard. If you choose to deregister, SARS may require a final VAT calculation on certain assets or stock you still hold. In some cases, this can lead to an unexpected once-off VAT cost. Although it’s not always a deal-breaker, it’s definitely something that should be properly assessed before making a move.

The Truth About the VAT Threshold? There’s No One-Size-Fits-All Answer

Every business is different. What works perfectly for one company could quietly cost another. That’s why decisions like this should always consider:

  • Your expenses and input VAT
  • Your type of clients
  • Your long-term growth plans

How PATC Can Help With the VAT Threshold Decision

This is exactly where we step in. At PATC, the approach is simple: no guesswork, no assumptions. Instead, we offer clear, practical guidance tailored to your business. We can run the numbers with you and help answer the key question: will deregistering actually save you money… or cost you more? If you’d like a broader view of your tax obligations, you can also explore our tax services page.

This VAT threshold increase is a positive change. Overall, it gives businesses more flexibility. But the real value lies in making the right decision for your situation, not just the easiest one.

Contact Us

At PATC, your first 1-hour consultation is always free (T&C’s apply). Whether you’re a new client wanting to discuss your tax position or need guidance on the VAT threshold change, we’re happy to have that initial conversation at no cost.

PATC Celebrates a National Top 4 SAIPA Achiever

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Seluleko Bhengu

Seluleko Bhengu

Celebrating Excellence at PATC

At PATC (Professional Accountants and Tax Consultants), excellence is something we pursue every day on behalf of our clients. It is also something we actively cultivate within our team. Today we are proud to share a remarkable milestone within the PATC family.

Seluleko Bhengu, one of our dedicated Trainee Accountants, has successfully passed the SAIPA Professional Evaluation (PE) and has been recognised as a Top 10 Achiever nationally, ranking #4 in South Africa. 

This outstanding accomplishment reflects the dedication, discipline and commitment required to succeed within the accounting profession. SAIPA themselves recognised the achievement as an exceptional milestone demonstrating the resilience and professional excellence expected of a future Professional Accountant (SA)

A Milestone for Seluleko and for PATC

PATC is proud to be a registered and accredited training centre with the South African Institute of Professional Accountants (SAIPA). Every trainee who qualifies through our programme represents more than a personal victory. It reflects the strength of the training environment, mentorship and professional development that our firm strives to provide. Seluleko’s achievement continues a growing legacy of PATC trainees successfully progressing into the profession. Her Top 4 national ranking places her among the highest performing candidates in the country and serves as an inspiring example of what commitment and discipline can achieve.

The Journey Behind the Achievement

Behind every professional qualification lies months, sometimes years, of dedication, sacrifice and perseverance. When asked what motivated her to commit so fully to preparing for the Professional Evaluation, Seluleko shared: “I have always believed in giving my best shot, no matter what I do. For the PE exam it was about pushing myself to be better and making my future-self proud. Honestly, making it into the Top 10 was a total surprise, but I guess all the hard work paid off.” Her story reflects something many professionals recognise. Success rarely arrives overnight. It is built through consistent effort and a clear commitment to improvement.

Building the Future of the Profession

At PATC, we believe that investing in people is the most powerful way to invest in the future of the profession. Our role as a SAIPA accredited training centre allows us to guide aspiring accountants through the rigorous journey toward professional qualification while ensuring they gain meaningful practical experience along the way. Seluleko’s achievement serves as both a proud moment for PATC and an inspiration to future trainees who will follow in her footsteps.

Congratulations Seluleko

Achieving Top 4 nationally in the SAIPA Professional Evaluation is an exceptional accomplishment and one that deserves recognition.
Seluleko’s dedication, discipline and professionalism embody the values that define PATC. We extend our heartfelt congratulations to her on this milestone and look forward to watching her continued growth and success within the profession. The future of accounting is bright and Seluleko Bhengu is certainly part of that future.

If you are a graduate aspiring to become a Professional Accountant, or if your organisation is looking to work with a firm committed to professional excellence and continuous development, PATC would be pleased to assist. To learn more about our services or training programmes, please contact our team.

Tax Court Member | PATC Founder Appointment

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Gavin Bacon Master Tax Practitioner South Africa

Gavin Bacon Master Tax Practitioner South Africa

This week marks an important milestone for Professional Accounting and Tax Consultants (PATC). Our founder, Gavin Bacon, Master Tax Practitioner, is currently serving as a Tax Court Member of the Tax Court of South Africa. This appointment reflects both his depth of expertise and the high level of trust placed in him within the South African tax system.

Gavin Bacon’s Role in the Tax Court of South Africa

Gavin is presently based at the Durban High Court until 30 January 2026, where he is assisting the presiding judge in a high profile matter involving serious tax and VAT considerations. Matters heard before the Tax Court are complex and require exceptional technical knowledge, practical experience, and a thorough understanding of tax law and procedure.

As an Accountant Member, Gavin provides specialist insight to support the court in evaluating intricate financial and tax related issues, ensuring that decisions are informed by both legislation and real world application.

A Proven History with the Tax Court

This is not Gavin’s first appointment to the Tax Court. He previously served as a Commercial Member from 2017 to 2022, gaining extensive experience in the judicial interpretation and application of tax legislation. His continued involvement with the Tax Court demonstrates a sustained record of professional excellence and credibility within the tax community.

What This Means for PATC Clients

For PATC clients, this appointment provides practical reassurance. It means your tax matters are handled by a team guided by direct experience of how complex cases are assessed and decided at Tax Court level.

PATC is well positioned to support clients facing complex or high risk tax matters, including VAT disputes, Capital Gains Tax, tax compromise applications, SARS disputes, and advanced tax advisory. Our advice is shaped by a clear understanding of both legislation and how it is applied in real world Tax Court proceedings, ensuring solutions that are sound, realistic, and effective.

Expert Guidance in Complex and High Risk Tax Matters

Clients benefit from strategic advice grounded in judicial level understanding, particularly in matters where risk, compliance, and financial exposure are significant.

Business as Usual at PATC

While Gavin fulfils his duties at the Tax Court, PATC continues to operate as normal. Our team remains fully available to provide uninterrupted accounting, tax, bookkeeping, and compliance services to clients across South Africa.

Trusted Leadership in an Evolving Tax Environment

In an increasingly complex tax landscape, access to experienced and credible leadership is essential. Gavin’s appointment reinforces PATC’s commitment to protecting client interests, ensuring compliance, and providing clarity and confidence in every tax matter.

If you require assistance with any tax related concern, whether routine or complex, our team is ready to assist.