Why the assessment rarely matches your PAYE
Payroll works out PAYE each month as if that month's pay, and only that pay, carried on for the whole year. Your assessment looks at the actual year: everything you earned, every deduction you are entitled to and every credit. The gap between the two is your refund or your bill. Refunds usually come from deductions payroll never saw. Bills usually come from income payroll never saw.
- A retirement annuity paid by debit order from your own account, not through payroll.
- Medical costs above what your scheme paid, which can earn the additional medical expenses credit.
- Joining a medical scheme your employer does not deduct, so payroll gave you no monthly credit.
- Interest above the exemption, rent, or a side income, none of which had PAYE on it.
- Two employers in the same months, each granting the full rebate and taxing in a lower bracket.
How the estimate is put together
The calculator follows the order of a SARS assessment. Remuneration from your IRP5 is added to interest above the exemption and to other taxable income. Retirement fund contributions are then deducted, within their limits, to give taxable income. Tax on that comes from the 2026/2027 table, less the age rebates, less the medical scheme fees credit, less the additional medical expenses credit. The result is compared with the PAYE on your IRP5 and any provisional tax you paid. More paid than owed is a refund; less paid is an amount owing. The same tax tables drive the PAYE calculator, and the full set is on the SARS tax tables page.
Worked example: a salary, a retirement annuity and a dental bill
Sipho is 38 and earns R420,000 a year. His employer runs his medical aid for him and his partner through payroll, so PAYE for 2026/2027 comes to R64,593.00 after the monthly medical credit. On his own he pays R3,000 a month into a retirement annuity, earned R12,000 in interest, and paid R38,000 for orthodontic and dental work the scheme did not cover. Medical scheme fees for the year were R34,800.
- Interest of R12,000 is under the R23,800 exemption, so it adds nothing.
- The annuity of R36,000 is well inside the limit of 27.5% of his income, so taxable income drops to R384,000.
- The additional medical expenses credit is R2,300.00: 25% of the amount by which his out-of-pocket costs exceed 7.5% of taxable income (R28,800). His fees of R34,800 are below 4 times the fees credit (R36,096), so they add nothing to it.
- Tax for the year: R51,133.00, against PAYE of R64,593.00.
Estimated refund: R13,460.00. Without the annuity the refund would be R1,625.00, so the annuity alone is worth R11,835.00 back from SARS this year, on top of the money saved for retirement.
What a retirement annuity does to the result
Same R420,000 salary, no medical aid, PAYE withheld at the payroll amount, 2026/2027 tables. Every rand of annuity inside the limit comes back at the marginal rate.
| Annuity for the year | Deduction allowed | Taxable income | Tax for the year | Refund |
|---|---|---|---|---|
| R0 | R0 | R420,000 | R73,617 | R0 |
| R12,000 | R12,000 | R408,000 | R69,897 | R3,720 |
| R24,000 | R24,000 | R396,000 | R66,177 | R7,440 |
| R48,000 | R48,000 | R372,000 | R59,292 | R14,325 |
| R96,000 | R96,000 | R324,000 | R46,812 | R26,805 |
| R150,000 | R115,500 | R304,500 | R41,742 | R31,875 |
At R420,000 the 27.5% limit is R115,500. In the last row only R115,500 is deductible this year and the other R34,500 carries forward, which is why the refund stops growing. The limit applies to pension, provident and annuity contributions together, including what your employer pays on your behalf as a taxable fringe benefit.
Retirement contribution limits for 2026/2027
Contributions are deductible up to 27.5% of the greater of your remuneration and your taxable income, both without retirement and severance lump sums. Two further limits apply: the deduction cannot exceed R430,000 for the year, and it cannot exceed taxable income before any taxable capital gain. The rand cap was R350,000 from 2016 until Budget 2026 raised it to R430,000 from the 2026/27 year. Anything over the limits carries forward to the next year. For longer-range planning, the retirement calculator projects what the contributions grow to.
Medical credits on assessment
The medical scheme fees credit for 2026/2027 is R376 a month for you, R376 for the first dependant and R254 for each additional dependant, for every month you were a member. Only the person who paid the fees can claim it. The additional medical expenses credit depends on your age and circumstances:
- Under 65 with no disability in the family: 25% of the amount by which your fees above 4 times the fees credit, plus your out-of-pocket costs, exceed 7.5% of taxable income.
- 65 or older, or where you, your spouse or your child has a disability: 33.3% of fees above 3 times the fees credit, plus 33.3% of out-of-pocket costs, with no income floor.
The medical aid tax credit calculator shows the monthly credit on its own.
Interest and other income
Interest from South African sources is exempt up to R23,800 a year if you are under 65 and R34,500 from 65. Only the excess is taxed, at your marginal rate. Rental income, freelance fees and other business income go in as profit after allowable expenses. If that kind of income is regular, you are probably a provisional taxpayer and should be paying in August and February rather than waiting for the assessment; the provisional tax calculator works out those payments. Employees who work from a dedicated home office may also have a deduction to add, which the home office tax calculator tests.
After you file
The assessment arrives as an ITA34 on eFiling. A refund is paid into the bank account on your SARS profile once any verification is finished, so keep that account current and have your supporting documents ready. An amount owing must be paid by the date printed on the ITA34; interest is charged after that.
Frequently asked questions
Why would I get a tax refund if my employer deducted PAYE correctly?
PAYE only knows what your employer pays you and deducts. Contributions to a retirement annuity you pay yourself, out-of-pocket medical costs, and a medical aid your employer does not run through payroll are all claimed on the ITR12, so tax for the year comes out lower than the PAYE withheld.
Why do I owe SARS money after filing?
The usual reasons are income that had no PAYE on it: interest above R23,800 (under 65), rental or freelance income, or two jobs at once. Each employer applies the full primary rebate and works out PAYE as if its salary were your only income, so two salaries together are taxed in a higher bracket than either payroll used.
Which documents do I need?
Your IRP5 or IT3(a) from each employer, an IT3(b) from each bank or investment provider showing interest, the tax certificate from your medical scheme, the contribution certificate for any retirement annuity, and receipts for medical expenses the scheme did not pay. Many of these are pre-populated on eFiling, but check them against the originals.
Is my pension fund contribution through payroll already counted?
Yes, for PAYE purposes, but enter it here anyway together with any retirement annuity. The calculator applies the 27.5% limit to the total for the year, just as SARS does on assessment, so leaving the payroll part out would overstate the room left for an annuity.
Do I pay tax on dividends from South African shares?
Not as income tax. Dividends from South African companies are generally exempt from income tax, and dividends tax is withheld by the company or your broker instead, so leave them out of this calculator. Interest and foreign dividends are treated differently.
What if my retirement contributions are more than the limit?
The excess is not lost. It is carried forward to the next year of assessment and treated as a contribution made in that year, so it can be deducted later, or used to reduce tax on a retirement lump sum or annuity.
How accurate is this estimate?
It follows the order SARS uses on assessment for a resident individual with employment income, interest, other taxable income, retirement contributions and medical costs. It does not cover capital gains, travel allowances, lump sums or foreign tax credits, so treat the answer as a guide and rely on your ITA34 for the final figure.