How commission income is taxed in South Africa

Commission is taxed at the same rates as any other income: it is added to your taxable income and taxed on the normal tables at your marginal rate. The part that sets commission earners apart is on the deductions side. If your commission is more than half of your total pay, section 23(m) of the Income Tax Act does not hold you back the way it holds back a salaried employee, so you can deduct the business expenses you incur to earn that commission.

That single test, whether commission is more than 50% of your remuneration, is what separates a sales representative who can write off travel, phone, and marketing costs from a salaried colleague who cannot deduct the same expenses at all.

The 50% test that unlocks deductions

Section 23(m) restricts the deductions an employee can claim against remuneration. The relief is for a person whose remuneration is derived mainly from commission. SARS reads "mainly" as more than 50%: your commission must be more than half of your total remuneration for the year. Where it is, the section 23(m) restriction falls away and you may deduct expenses actually incurred in producing your income, provided they are not capital or private in nature.

A few details decide whether you clear the test:

• It is measured against your total remuneration, which includes basic salary plus the fringe benefits and contributions that make up your package, not just cash.
• The test looks at what you "normally" earn. SARS treats "normally" as a question of fact across your prior and future years, so one weak year where commission dips below half does not automatically disqualify a genuine commission earner. The opposite is also true: a single bumper year does not turn a salaried employee into a commission earner.
• If you fail the test, you are in the same position as a salaried employee and can deduct very little against your income.

What a qualifying commission earner can deduct

Where commission is more than half your pay, you can deduct the ordinary running costs of earning it, as long as they were actually incurred for business and are not capital or personal. In practice that includes:

• business travel, claimed on an accurate logbook of business kilometres (home-to-work travel is private and does not count)
• cell phone and data used for work
• marketing, entertainment of clients where genuinely incurred for the business, and sales materials
• service fees such as accounting, administration, and legal costs
• a home office, subject to the section 23(b) tests

Keep the records. Vehicle claims without a logbook are disallowed, and SARS can ask you to prove any expense.

A worked example

You are a sales representative. Your total remuneration for the year is R500,000, of which R350,000 is commission. Commission is 350,000 / 500,000 = 70% of your pay, comfortably more than half, so section 23(m) does not restrict you. During the year you incur R80,000 of genuine business expenses: logbook-based business travel, your work phone, client marketing, and accounting fees.

• Remuneration: R500,000
• Less deductible business expenses: R80,000
• Taxable income from the work: R420,000

At R500,000, your top slice sits in the 31% bracket (taxable income between R370,501 and R512,800 for the 2026 year of assessment). The R80,000 deduction is therefore worth R80,000 x 31% = R24,800 in tax.

Now compare a salaried colleague who also earns R500,000 and spends the same R80,000 on work travel, phone, and the rest. Because their pay is salary, not commission, section 23(m) blocks almost all of it. Their deduction is close to nil, and they carry the full R80,000 cost themselves. Two colleagues, the same R80,000 spent on the job, and only the commission earner recovers part of it through tax, because of how the pay is classified.

Claim what your structure allows

The lesson for a commission earner is to track expenses all year, because the right to deduct them is the advantage your pay structure gives you. Our guide to tax for freelancers and side income covers the same deduction rules that apply when you work for yourself, and the income tax calculator shows how a deduction moves your taxable income through the brackets. For the related rules, see why a salaried employee faces an extra home-office hurdle under the same section 23(m), and why overtime and commission are not taxed at a special higher rate.

SARS sources:

• https://www.sars.gov.za/types-of-tax/personal-income-tax/filing-season/home-office-expenses/
• https://www.sars.gov.za/wp-content/uploads/Legal/Notes/LAPD-IntR-IN-2012-28-Home-Office-Expenses-Deductions.pdf
• https://www.sars.gov.za/tax-rates/income-tax/rates-of-tax-for-individuals/