If you’re under 18 and reading this, do you think you’re too young for taxes? Or if you’re older than 18 or a parent, did you know that you or your child can be liable for taxes even if they are younger than 18?
Who is a minor?
A minor child is a natural person under the age of 18.
The same as adults, a minor child must pay income tax on income earned by them. In addition, they will have to submit an income tax return if they earn an income that requires them to do so.
When is one liable to pay tax?
As an individual, you are only liable to pay tax if your taxable income is more than the tax threshold for the relevant tax year.
The tax threshold for the year 1 March 2022 to 28 February 2023 is R91 250 for individuals younger than age 65.
Do I pay taxes even if I’m a minor?
Yes, you will need to pay tax even if you are a minor and earn taxable income above R91 250. Your parent/guardian (SARS term = registered representative) must ensure that you are registered for income tax.
Your parent/guardian will be the contact person for SARS, however, they cannot be held liable for your income tax.
Minors and Labour
According to the Basic Conditions of Employment Act, it is a criminal offence to employ a child younger than 15, except in the performing arts with a permit from the Department of Labour.
Children aged 15 to 18 may not be employed to do work inappropriate for their age or work that places them at risk.
Minor Income scenarios to consider
1. Cash gifts received on birthdays or otherwise
These are not a taxable income as defined as it is a gift, there will be no need to register for income tax.
2. Donations and interest
Section 7(3) of the Income Tax Act No. 58 of 1962 makes that income to be that of the parent, where the parent donates an investment, asset or cash and as a result of the donation, income accrues to the minor child. The income accruing as a result of the donation will be taxed in the hands of the parent and not the minor child.
This is to avoid parents donating to their children to reduce their own tax liability as the children will pay lower tax than they would.
3. Holiday Work
During the academic holidays, learners often carry out casual work to earn extra bucks to have fun with their friends or save up for something special they want to buy.
This income is fully taxable, however, because if falls under the “threshold” jargon for minimum earning, no tax is payable nor does one need to register.
4. Trading Forex
Some of the older minors are getting involved in trading forex as a means to multiply the funds they have to spend.
Any income earned through trading of forex is taxable unless it falls under the threshold of R91 250 as set by the SARS Commissioner.
How can we help?
Still have questions? We have put together a quick check for you. Head over to downloads to access it or click here.
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