Net income for a freelancer after income tax and provisional-tax provisioning.
Net income
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Taxable profit
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Income tax
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Set aside monthly
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No payslip means no tax safety net
When you are employed, your employer deducts PAYE every month and pays it to SARS, the South African Revenue Service, on your behalf, so tax never really feels like your money. Freelancing strips that away. The full invoice lands in your account, tax and all, and it is on you to set aside what you owe and pay it twice a year as provisional tax. The danger is obvious: spend the gross and you have a nasty bill you cannot fund. This calculator turns your annual freelance income and expenses into a clear net figure and, crucially, a monthly amount to put aside so the provisional payments are already covered when they fall due.
Profit, not turnover, is what gets taxed
The first thing the tool does is subtract your deductible business expenses from your income to get taxable profit, because you are taxed on what you keep, not on everything you bill. Legitimate expenses for a freelancer typically include the business-use share of your internet and phone, software subscriptions, professional fees, a home office if you meet the requirements, and travel for work. The calculator then applies the individual income tax brackets to that profit and subtracts your age rebate. It uses the same progressive scale and rebates that apply to a salaried person, because a freelancer is taxed as an individual, not as a company. Those brackets and rebate amounts are the calculator's working assumptions and are worth confirming against the current SARS tables.
R600,000 of income, R80,000 of expenses, under 65
Take the defaults. You bill R600,000 in a year and have R80,000 of deductible expenses, and you are under 65. The calculator works taxable profit as R520,000. Running that through the brackets gives gross tax of about R124,067, and subtracting the primary rebate of R17,235 leaves income tax of R106,832. Your net income is the R520,000 profit less the R106,832 tax, which is R413,168. Divide the tax across the year and you should be setting aside about R8,903 a month so that nothing is a shock when provisional tax is due.
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The provisional tax rhythm
Provisional tax is not an extra tax, it is just the schedule on which a freelancer settles ordinary income tax. You estimate your annual taxable income and pay it in two instalments, one near the end of August and one near the end of February, with an optional third top-up payment after year end to mop up any underestimate. SARS can levy penalties if your estimate is too low against the eventual figure, which is why the monthly set-aside discipline matters. The honest tip is to keep the tax money in a separate interest-bearing account so you are not tempted to dip into it, and so it earns a little while it waits. If your taxable income from freelancing is small and below the provisional threshold, you may fall outside the provisional system, which is the kind of detail to check with SARS.
What the calculator leaves out
This is a clean income tax view, and a few real-world items sit outside it. It does not model retirement annuity contributions, which a freelancer can deduct up to 27.5 percent of taxable income, capped at R350,000 a year, and which would lower the tax shown here. It does not include VAT, which becomes compulsory once your taxable turnover passes the R1 million registration threshold, nor any provisional tax penalties or interest. It also assumes your expenses are genuinely deductible, so keep invoices and apportion mixed personal-and-business costs honestly. Treat the output as a solid budgeting figure, then layer on retirement contributions and confirm the brackets, rebate, and thresholds with SARS before filing.
Should I register as a company instead of freelancing as an individual?
Not automatically. A company pays corporate tax and then dividends tax when profits are distributed, which can total more than the individual scale at modest profit levels, and it adds compliance cost. A company tends to make sense once profits are high and consistent, when you want to retain earnings in the business, or for liability reasons. At R520,000 of profit, freelancing as an individual is often simpler and not necessarily more expensive. Model both before incorporating.
Can I deduct my home office as a freelancer?
You can, but only if you meet specific conditions: the space must be regularly and exclusively used for your work and be specifically equipped for it, and more than half your work must be done there. You then deduct a proportionate share of rent or bond interest, rates, and electricity based on the floor area used. SARS scrutinises home office claims, so measure the area, keep the calculation, and only claim if you genuinely meet the test.