Farmer's Average Taxable Income | South Africa Tax Guide

The farmer's average taxable income from farming is calculated as follows:

(i) Divide the aggregate of the current year's taxable income from farming, plus the previous 4 year's taxable income from farming, by 5 to arrive at an average. If the farmer has only farmed for part of a year, such year is treated as a full year. The taxable income from plantation farming (if any) would be included in this total.

(ii) If the farmer has farmed for less than 4 years prior to the current year, the average is taken over as many years as he has farmed.

(iii) If the farmer had not carried on farming operations prior to deciding to be taxed on the average method (and neither had his spouse, either before or after their marriage) then -

(a) if his taxable income from farming for the current year does not exceed R5 000, his actual taxable income from farming will be taken as the average,

(b) if his taxable income from farming for the period exceeds R5 000, but not R7 500, the average will be R5 000, and

(c) if his taxable income from farming for the period exceeds R7 500, the average will be 2/3rds of such taxable income

(iv) Where there have been farming losses in the previous 4 years, such losses are taken into account in the determination of average farming income.

(v) The average annual income is limited to a minimum of nil.