Key Takeaways

This article, brought to you by Sanlam, will help you understand how SARS views side-hustle income, when you may need to submit a return, how tax saving works in practice, and which risks to keep in mind during tax season.

What Does SARS Count as Side-Hustle Income?

Before looking at tax saving tips, it helps to understand what SARS is likely to view as taxable side income.

SARS does not use the phrase “side hustle” as a technical tax category, but SARS defines income from a second source such as from freelance work, consulting, independent contracting and small trading activities as generally taxable and must be declared as part of your total income.

For individuals, this income is usually treated as business income and captured in the Local Business section of the ITR12 return. That means your side-hustle income is added to your salary or other earnings when SARS calculates how much tax you owe.

Remember, even occasional or part-time work can have tax consequences. What matters is whether the income is taxable, not whether the work is full-time.

Do You Need to Submit a SARS Tax Return This Season?

The 2026 Filing Season is under way. For the 2026 year of assessment, if your taxable income is above SARS’s threshold of R95,750 and you’re under 65, you may need to submit an income tax return. For most individuals earning side-hustle income, that return is the ITR12 filed via SARS eFiling, with the business income declared in the Local Business section. If you operate through a registered company, the company must file its own separate company tax return, the ITR14.

It may help to gather your IRP5, invoices, bank statements and proof of business expenses before you start your return, since good records can make eFiling simpler and support any deductions you claim.

When Does Provisional Tax Apply?

Some side hustlers also need to think about provisional tax, especially when a large part of their income is not taxed through PAYE.

Provisional tax is a system that allows SARS to collect tax in advance on income such as freelance fees, business profits or rental income that does not have employees’ tax deducted each month. In many cases, provisional taxpayers submit returns and payments twice during the tax year, which can help spread the tax burden instead of leaving everything to final assessment.

This does not always apply to every person with extra income, which is why estimates and thresholds matter. Where the rules are unclear, a registered tax practitioner can help interpret your position.

How Can You Save on Tax Legally?

Tax saving for side hustlers is usually less about loopholes and more about compliance, planning and legitimate deductions.

SARS small-business guidance makes it clear that allowable business expenses can generally be deducted when they are genuinely incurred in producing income and properly supported by records. For illustration, a freelance designer may be able to deduct costs such as design software, internet used for work, travel to client meetings and other legitimate business expenses, depending on the facts and supporting documents.

Keeping your business income separate from personal spending can also make it easier to prepare your tax return and identify real small business tax savings. If your business grows, it may also be worth understanding whether you qualify for a small-business tax regime or turnover-based system published by SARS.

SARS also announced relief measures for small businesses in the 2026 budget, including increased compulsory VAT threshold, higher turnover tax limits, and expanded capital gains exemptions effective April 1, 2026. It may be worth checking in with a financial adviser, to see if your side hustle may benefit.

A tax-free savings account (TFSA) may also support longer-term saving and investing. While contributions do not reduce your taxable income, the interest, dividends and capital gains earned within the account are generally tax-free. From 1 March 2026, you can contribute up to R46,000 per tax year, subject to a R500,000 lifetime contribution limit.

What Risks and Trade-Offs Should You Keep in Mind?

Tax compliance can support better financial planning, but there are real risks if income is omitted or records are weak.

Not declaring side-hustle income can lead to penalties, interest and additional assessments if SARS identifies gaps between what you earned and what you declared. Claiming expenses that are personal rather than business-related can also create problems if you're asked to support those deductions later.

There is also a trade-off between simplicity and formality. Keeping a side hustle informal may feel easier at first, but formal records and timely submissions may support more accurate tax planning and smoother business growth over time.

Risk warning: If you do not set money aside for tax during the year, a side hustle that looks profitable month to month may still leave you with a difficult tax bill later.

Next Steps

This article is for general information and education only and does not constitute financial advice. For personal recommendations, speak to a licensed financial adviser.