Tax on Side Hustles: Declaring Your Freelance Income in SA

By / September 22, 2025

South Africa’s side-hustle culture is booming. Whether you are designing logos after hours, doing weekend deliveries, renting out a spare […]

Tax on Side Hustles Declaring Your Freelance Income in SA

South Africa’s side-hustle culture is booming. Whether you are designing logos after hours, doing weekend deliveries, renting out a spare room, tutoring, building websites, shooting weddings, or running a small craft business, the money you earn is taxable. This guide explains how SARS expects you to declare and pay tax on side-hustle or freelance income, what you can deduct, when provisional tax and VAT kick in, and how to stay compliant with minimal pain.

1) Side hustle = “carrying on a trade”

In South African tax law, most side hustles count as “carrying on a trade”. “Trade” is very broadly defined and includes any profession, vocation, or venture undertaken to make money. If you earn above the annual tax threshold (see Section 6 below), your side-hustle profits are taxed at your personal marginal rates.

Importantly, you are taxed on profit (income minus allowable business expenses), not on your gross sales.

2) Must I register a company?

No. You can operate as a sole proprietor under your personal income tax number and declare side-hustle income on your annual individual return (ITR12). Many freelancers start this way because it is simple and cheap. You can incorporate a company later if you outgrow the sole-prop route or for liability and brand reasons.

Practical tip: Open a dedicated bank account for the side hustle and keep separate books from day one. It makes tax time far easier and reduces the risk of disallowed deductions due to poor records.

3) When do I have to file a tax return?

If you earn employment income only from one employer and below certain thresholds, SARS may auto-assess you. However, the moment you have side-hustle income, you should expect to file an ITR12 and complete the “Local Business, Trade and Professional Income” section. This is where you capture your side-hustle turnover, cost of sales, and deductible expenses.

For the 2025 filing season, SARS ran auto-assessments in July and opened filing for non-provisionals in late July, with different deadlines for provisional taxpayers in January. Always check the current year’s dates, but as a rule:

  • Non-provisional taxpayers file in winter/spring.
  • Provisional taxpayers (see Section 7) typically have until mid-January following the end of the tax year to file their returns.

4) Am I a freelancer or a “deemed employee”?

Some side gigs look like jobs. If you work mainly at a client’s premises and under their control or supervision, SARS may regard payments to you as “remuneration”. In that case, the payer might be obliged to withhold PAYE (employees’ tax) from your invoices and issue an IRP5 with the correct code (often 3616 for independent contractor income).

Where your relationship is genuinely independent (your own tools, methods, risk, and more than one client), you usually receive no PAYE withholding and you handle your own tax via provisional tax (see Section 7). If the payer does withhold PAYE, you still declare the income and claim your allowable expenses on your ITR12; the PAYE withheld will reduce your final tax due.

Practical tip: Put the status in writing. Your contract should describe your independent-contractor status, deliverables, your control over working methods and time, and that you carry business risk. This helps if SARS ever questions the relationship.

5) What expenses can I deduct?

You are taxed on net profit. Deduct all ordinary and necessary expenses you actually incur in earning that income. Keep invoices, bank statements, and slips for five years from submitting your return. Typical deductions include:

  • Direct costs of sales: materials, stock, printing, subcontractor fees.
  • Vehicle and travel: Keep a logbook for business kilometres (opening and closing odometer readings for the year, plus date, destination, reason and distance for each business trip). Without a proper logbook, SARS can deny travel claims.
  • Home-office costs: If you have a separate, exclusive-use room used regularly for trade, you may claim a pro-rata portion of rent or interest on bond (not both), rates, electricity, cleaning and Internet based on floor area. Exclusive-use means the space is not used for anything else.
  • Phone and data: Business portion only; apportion fairly (e.g., itemised usage or a supportable percentage).
  • Equipment and tools: Claim wear-and-tear (depreciation) on laptops, cameras, phones, desks, tools and similar assets used in your trade in line with SARS’s schedules. Small “loose tools” and certain low-value assets may qualify for a full write-off in the year of use, while other assets must be written off over SARS-accepted useful lives.
  • Software and online services: Design suites, accounting packages, cloud storage, domains, hosting, marketplaces and lead-gen fees used for your trade.
  • Marketing: Website development, online ads, printed marketing collateral and professional photography for your service or product.
  • Professional fees: Accounting, tax, legal, coaching and industry memberships (if related to your income).
  • Bank charges and payment-processing fees.
  • Insurance: Business-related cover (e.g., public liability, professional indemnity, specified equipment cover).

Common pitfalls:

  • Claiming private costs. If an expense serves both private and business purposes, claim only a reasonable, documented percentage tied to business use.
  • No logbook for travel. SARS can disallow the entire claim.
  • Home-office claimed without an exclusive-use room or where you did not actually work mainly from home.

6) How much income before I pay tax?

South Africa has a tax-free threshold that depends on age. For the 2025 year of assessment (1 March 2024 to 28 February 2025), the thresholds are unchanged from the prior year:

  • Under 65: R95,750
  • 65 to under 75: R148,217
  • 75 and older: R165,689

If your total taxable income (salary plus side-hustle profit, less allowable deductions) exceeds your threshold, you will pay tax at normal individual rates on the excess. Your employer’s PAYE on your salary does not cover your freelance profit; expect an additional assessment unless you make provisional payments during the year.

7) Provisional tax for side hustlers

If you carry on a business (which includes almost all side hustles), you are a provisional taxpayer, even if your profits are small. Provisional tax is not an extra tax; it is a pay-as-you-go system to pre-pay your year’s income tax so you do not face a large bill at filing time.

  • First period (IRP6): Pay by end-August (6 months into the tax year).
  • Second period (IRP6): Pay by end-February (year-end).
  • Third/Top-Up (optional): By end-September (7 months after year-end) if you underpaid and want to minimise interest.

Estimating correctly (avoid penalties)

SARS expects realistic estimates for the second period:

  • If your actual taxable income ≤ R1 million, your second-period estimate must be at least the “basic amount” (usually your last assessed taxable income escalated) or within 90% of actual to avoid the 20% underestimation penalty.
  • If your actual taxable income > R1 million, your second-period estimate must be at least 80% of actual to avoid the penalty.

Late provisional payments also draw a 10% late-payment penalty plus interest. If in doubt, rather be conservative and slightly overpay; SARS will refund or set off the excess after assessment.

8) VAT and side hustles

VAT is separate from income tax:

  • Compulsory VAT registration when your taxable supplies (most sales of goods/services) exceed R1 million in any 12-month period, or are likely to exceed it.
  • Voluntary registration is possible from R50,000 of taxable supplies in the past 12 months.

VAT registration means you will charge 15% VAT on most local supplies, issue compliant tax invoices, file VAT returns, and can claim input VAT on qualifying business purchases. Voluntary VAT can be useful if your clients are VAT-registered businesses (they can claim your VAT) and you incur significant input VAT on purchases.

Note: Certain supplies are exempt or zero-rated; some platform and cross-border services have special place-of-supply rules. Get advice if you sell digital services, offer short-term accommodation, or export.

9) How to declare your side-hustle on eFiling (step-by-step)

  1. Register for income tax (if you have never worked before) and activate eFiling.
  2. Register as a provisional taxpayer if you carry on a business.
  3. On your IRP6 (August and February), capture your expected taxable income and calculate the provisional payment due.
  4. When the ITR12 opens, request it on eFiling and customise the return to include “Local Business, Trade and Professional Income”.
  5. In that section, complete:
    • Sales/fees (turnover)
    • Cost of sales (if you sell goods)
    • Operating expenses (line-by-line)
    • Capital allowances (wear-and-tear)
    • Home-office and travel (with supporting calculation and logbook)
  6. Upload supporting documents only if requested, but keep them for five years.
  7. Submit and settle any balance (or await a refund) after SARS issues your assessment (ITA34).

10) Example: Photographer with a day job

  • Salary: R420,000 (PAYE already deducted by employer)
  • Side-hustle turnover: R160,000 (weekend weddings and shoots)
  • Expenses:
    • Second-hand camera body and lens: R30,000 (wear-and-tear per SARS tables, say 3-year write-off → R10,000 this year)
    • Software subscriptions: R6,000
    • Travel to shoots (with logbook): R14,000 claimable
    • Memory cards, batteries, lighting spares: R8,000
    • Insurance on gear (business portion): R3,600
    • Marketing and website: R5,400
  • Net side-hustle profit: R160,000 − (10,000 + 6,000 + 14,000 + 8,000 + 3,600 + 5,400) = R113,000

Add R113,000 to salary and apply individual rates for the year. Because employer PAYE covered only the salary, the taxpayer should have made provisional payments on the extra R113,000. At filing, SARS recalculates tax on the combined income, subtracts PAYE and provisional payments already made, and charges or refunds the difference.

11) Special topics for popular side hustles

Rideshare and delivery drivers

  • Travel is your biggest cost. A detailed logbook is vital. Keep fuel, maintenance, tyres, insurance and tracking fees.
  • If you rent a vehicle, keep the lease and all statements; apportion personal vs business use carefully.
  • Commissions and platform fees are deductible.

Airbnb / short-lets

  • Income is fully taxable. You can deduct pro-rata municipal charges, cleaning, consumables, Internet, and platform fees.
  • If you cross VAT thresholds, commercial accommodation rules apply; seek advice on zero-rating for longer-term stays vs standard-rated short-stays.

Creators and influencers

  • Track sponsorships, ad revenue, affiliate income, and barter (free products) — non-cash receipts can be taxable at market value.
  • Equipment and software follow wear-and-tear and expense rules.

Online retail and crafters

  • Keep clear inventory records: opening stock, purchases, cost of sales, and closing stock.
  • Packaging, courier, returns and marketplace commissions are deductible.

12) Turnover Tax (the “micro-business” system)

If your total turnover is R1 million or less, you may elect Turnover Tax instead of normal income tax. It is a simplified, presumptive system with very low rates on turnover (not profit), and light compliance. Individuals (sole proprietors) can qualify, subject to detailed rules (for example, restricted investment income, and limits around personal-service income, connected persons and more).

For 2025, the Turnover Tax bands start at 0% up to R335,000, rising to a maximum of 3% on turnover near R1 million. This can be beneficial for very small traders with thin margins and minimal expenses, but it can be worse than normal tax if you have high costs (because you are taxed on turnover). Run the numbers before you elect.

13) Record-keeping: what to keep (and for how long)

  • Invoices issued and received
  • Bank statements and till slips
  • Contracts and engagement letters
  • Vehicle logbook (business kilometres)
  • Home-office working papers (floor-area calculation, proof of occupancy and costs)
  • Asset register (date in use, cost, method and rate of depreciation)

You must keep supporting records for five years from the date you submit the return for that year. If you did not file a return when you should have, keep the records indefinitely until you submit.

14) Penalties and how to avoid them

  • Late ITR12 filing: SARS levies fixed-amount monthly penalties based on your taxable income (from R250 up to R16,000 per month, for up to 35 months), plus potential interest.
  • Provisional tax pitfalls:
    • Underestimation penalty (generally 20%) if your second-period estimate is too low relative to actuals (see the 90%/80% rules above and the “basic amount” concept for ≤ R1 million).
    • 10% late-payment penalty for missing IRP6 due dates, plus interest.
  • Understatement penalties after an audit can be severe (up to 200% in the worst cases).

If you discover past non-disclosure, consider the Voluntary Disclosure Programme (VDP) to regularise your position; it can reduce penalties and avert criminal prosecution, provided you qualify and make a full, honest disclosure.

15) Home-office and travel claims: how to get them right

Home-office:

  • Must be a separate, exclusive-use room used regularly for your trade.
  • Apportion expenses by floor area (office m² ÷ home m²).
  • You may claim rent or interest on bond (not both), plus a pro-rata share of rates, water, electricity, cleaning and Internet.
  • Keep a floor-plan or basic sketch and all bills as evidence.

Travel:

  • Record the odometer on 1 March and last day of February each year.
  • Keep a trip-by-trip log for business travel (date, from, to, reason, kms).
  • Without a logbook, SARS will disallow your business-travel deduction.

16) VAT red flags and opportunities

  • If your turnover is flirting with R1 million, monitor a rolling 12-month view. Once your supplies are likely to exceed the threshold, you must apply to register.
  • If your clients are mostly consumers, VAT can hurt your pricing unless you improve input VAT recovery (e.g., on big equipment purchases).
  • If your clients are VAT-registered businesses, voluntary VAT from R50,000 turnover can help cash flow via input credits.

17) Five setup moves that make tax season easy

  1. Separate bank account for the side hustle.
  2. Cloud accounting (e.g., Sage/QuickBooks/Xero) and a digital receipt vault.
  3. Weekly bookkeeping habit (30 minutes).
  4. Quarterly profit check and provisional-tax forecast (do not wait for February).
  5. Professional: Engage a tax practitioner if your affairs get complex (VAT, mixed supplies, cross-border work, big asset purchases, or when electing Turnover Tax).

18) Frequently asked questions

Q: I already pay PAYE on my salary. Why do I still owe more tax?
Because PAYE from your employer covers only your salary. Your side-hustle profit pushes up your total taxable income. Provisional tax spreads these extra payments during the year so you do not face a large bill at filing.

Q: I earned only R35,000 from my side hustle this year. Must I register as a provisional taxpayer?
Yes, if you are carrying on a business, you are generally a provisional taxpayer, regardless of amount. (A specific exclusion exists for natural persons with no business who only earn small amounts of interest and similar passive income.)

Q: Do I pay tax on money from selling personal items online?
Usually not if you are merely disposing of personal-use assets at a loss or break-even. But if you buy with the intention to resell (a trade), that income is taxable.

Q: Can I claim my entire phone bill and car?
No. Claim only the business portion, backed by a reasonable method (itemised usage for phone; logbook for travel).

Q: When should I consider a company instead of a sole prop?
When liability, branding, partners, or scale matter; or where the personal service provider and labour broker rules could be better managed in a company setup. Get tailored advice before restructuring.

19) The bottom line

Side-hustle tax in South Africa is entirely manageable if you keep clean records, price in your tax, and use provisional tax to smooth cash flow. Focus on profit, not just sales. Claim the right deductions, respect the logbook and home-office rules, watch the VAT threshold, and keep a five-year paper trail. Do this, and tax season becomes a formality rather than a shock.

Sources

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