In South Africa, social media influencers are required to declare any products, gifts, services, or other non-cash benefits received from companies in exchange for promotion, content creation, or brand collaborations because these items are classified as taxable income. This obligation stems from the need to ensure tax compliance, as influencers are typically treated as sole proprietors or independent contractors earning revenue through their online activities. SARS says that failure to declare can lead to audits, penalties, or legal consequences, as it is now actively monitoring this sector to ensure it collects all due taxes as a consequence of the rapidly evolving digital and gig economies.
SARS recently published an interesting article on this specific topic – see:
https://www.sars.gov.za/media-release/sars-clarifies-issues-around-social-influencers/
In addition, missionaries and those working in the various faith-based organisations who are receiving donations, gifts and other assets are again being scrutinised. In particular, those who are leveraging side gigs, such as e-commerce or freelance services, are now facing questions about balancing ministry income and benefits, and the generation of taxable income, as compliance with tax and labour laws is becoming more critical. If you need to know more about this sensitive topic, join us at this year’s Mid Year Payroll Taxes and Associated Legislation Webinar on the 10th of October 2025. The details are further on in this NewsFlash.
🎟️ Big ticket items:
Employee refunds from SARS – new process and tax implications:
SARS has tightened its refund process in recent years to curb fraud and ensure that only legitimate refunds are paid. Employees who are due a refund, usually because their PAYE deductions exceeded their final tax liability, can still expect payments of R100 or more within 72 hours, but only if their return is accurate, their banking details are verified, and no further checks are triggered. Where SARS initiates a review, refunds may be delayed for up to 21 business days during verification, or up to 90 business days in the case of a full audit. In addition, refunds may be offset against any outstanding tax debts or penalties before being released, making compliance an essential part of the process.
The stricter refund framework now includes several verification steps designed to improve accuracy and reduce risk. SARS validates that banking details belong to the taxpayer, matches third-party data from employers, banks, retirement funds, and medical schemes against what was submitted, and may request supporting documents such as IRP5/IT3 certificates, medical aid or retirement annuity confirmations, and proof of deductible expenses. Returns are also risk-profiled, with unusual claims or frequent refund requests flagged for deeper scrutiny. SARS also verifies banking detail changes with the banks to confirm the details are legitimate and to avoid fraud.
Employees, therefore, need to ensure their records are complete, accurate, and aligned with third-party data to avoid unnecessary delays or complications in receiving refunds.
Employee refunds to their employers– new section 11n(A) implications:
Recent changes to section 11(nA) of the Income Tax Act have refined how employee refunds to employers are treated. Previously, a deduction was only allowed where the refunded amount had been taxed as income in an earlier year. This created uncertainty where, for example, a bonus or allowance was later clawed back but may not have been clearly included in taxable income. In those cases, the relief under section 11(nA) was not always available, leaving employees to wait until their annual assessment to claim any adjustment.
From 1 March 2025, the law has been broadened to make the deduction available for all qualifying refunds of remuneration, regardless of the earlier tax treatment. At the same time, a new provision in the Fourth Schedule now permits employers to reduce an employee’s remuneration for PAYE purposes by the amount refunded. This means that tax relief can be provided in real time when the refund is made, rather than relying only on SARS to correct it at year-end. It places employers in a clearer position to deal with clawbacks of incentives, sign-on bonuses, or similar payments.
But how should employers deal with this on an IRP5 and how does this influence my employees who has already left the company? Can I submit an IRP5 for them too? A lot of these questions and more will be answered in detail in our upcoming webinar so be sure not to miss this.
Taxation of pensions accrued outside SA and then brought into SA on retirement:
When a South African tax resident retires and receives a pension that was accrued outside of South Africa, the taxation of that pension falls under the provisions of the Income Tax Act, 1962, read together with any applicable Double Taxation Agreements (DTAs). In terms of section 9(2)(i), South Africa has the right to tax any annuity or pension received by or accrued to a resident, regardless of where the fund is located. However, DTAs often allocate taxing rights to the country of source, which may mean the pension is taxable only in the foreign country. Where both countries retain taxing rights, section 6quat provides relief in the form of a foreign tax credit to avoid double taxation.
The issue becomes particularly relevant where individuals return to South Africa after working abroad and begin drawing on retirement funds accumulated offshore. If the DTA between South Africa and the foreign jurisdiction grants exclusive taxing rights to the source country, the pension may be exempt from South African tax. If not, SARS will require full disclosure of the income, with a credit allowed for foreign taxes paid. This means taxpayers must carefully consider the specific treaty wording, maintain supporting documentation, and ensure correct reporting to avoid penalties. In short, pensions earned abroad do not automatically escape South African tax once brought home; the treatment depends on residency, source rules, and treaty protections.
Section 10(1)(gC)(ii) of the Income Tax Act, 1962 is one of the exemptions from normal tax. At present, it provides that the following amounts are not included in the taxable income of a South African tax resident: “any pension received by or accrued to any resident from a source outside the Republic, which arises from past employment outside the Republic.”
This exemption was designed decades ago to prevent double taxation of pensions for South Africans who had worked abroad and then returned home in retirement. In practice, though, National Treasury has found that in many cases these pensions are not taxed anywhere, because some foreign countries either don’t tax the pension (especially if the person is no longer resident there), and South Africa exempts it. That’s the “double non-taxation” Treasury is now trying to close.
If the Draft Taxation Laws Amendment Bill, 2025, is passed, this paragraph will be deleted with effect from 1 March 2026. After that, foreign pensions and annuities received by South African residents will be taxable in SA, subject only to relief under a Double Tax Agreement (DTA).