How much you need to earn to be in the richest 1% in South Africa (2024)

Despite those that earn the average salary in South Africa already being among the top 12% of income earners nationwide, you need to make almost six times more to join the top 1% of the wealthiest South Africans.

According to Stats SA’s latest data, the average formally-employed non-agricultural worker earns R25,304 per month in South Africa.

While this is considered the average, according to the World Inequality Lab, this salary puts you in the country’s top 12% of income earners – meaning 88% of the population is poorer than you.

In the same vein, the monthly salary you would need to be a top 1% earner is aroundR151,541, the data shows, which is 5.98 times more than the average income earner in the formal sector.

The World Inequality Lab database was constructed by an international network of more than 100 academics, including Thomas Piketty and Nobel Prize winner Abhijit Banerjee, making it possible to compare income inequality in 173 countries. The estimates are based on various sources, including tax data, surveys, and other statistics.

Interestingly, to better understand the global significance of being among the top 1% of South Africa’s wealthiest individuals, Knight Frank’s Wealth Sizing Model compared this to 25 other countries and what it takes to be considered a 1% earner in their jurisdictions.

The “Top 1%” became a notable term during the global financial crisis, but the wealth needed to join their ranks varies considerably from country to country, said the report.

According to the report, in annual terms, you need to earn $109,000 (R2.06 million) to join the top 1% of the wealthiest South Africans, roughly similar to the estimate of the World Inequality Lab simulator.

By contrast, Monaco’s entry point – the wealthiest nation in the comparison – of $12.4 million (R234.05 million) is over R232 million more than South Africa’s.

Switzerland and Australia have the next highest entry points after Monaco, requiring a net worth of $6.6 million (R124.6 million) and $5.5 million (R103.8 million), respectively.

In the United States, $5.1 million (R97.7 million) will get you over the threshold to fall into the country’s wealthiest 1% of people.

To put the wealth of these top countries into perspective, a recentstudyconducted by Picodi.com analysts estimated that South Africans earning the average salary in the country would have to work for at least 68 years to become a dollar millionaire ($1 million).

This meansthe average South African would have to work for 843 years to be accepted into Monaco’s top 1%, 449 years to be in Switzerland’s top 1%, and 374 years to be among the USA’s wealthiest 1%.

Not all sunshine and rainbows among the top 1% in South Africa

While being among the top 1% of income earners may seem like a great place to be, earning such a wage means the government often targets you as a source of revenue, which remains the case in South Africa recently.

Just because it appears that the South African government has iced plans to introduce a wealth tax in the country does not mean that wealthy individuals can rest easy.

According to Elzahne Henn, Director and Head of Private Clients at Mazars in South Africa, the South African Revenue Service (SARS) has shifted to an aggressive compliance mode and is focusing on wealthy taxpayers with complex financial structures and trusts.

Wealthy families and companies often use trusts to protect and distribute assets, minimise taxes, maintain privacy over their holdings and control the timing and conditions of transfers across generations.

SARS has made its intentions of targeting wealthy taxpayers clear since it re-established the High Wealth Individual (HWI) Segment in 2021 to focus on the tax affairs of the rich. The revenue service has also strengthened its investigative capabilities and has emerged victorious in several high-profile cases.

In September 2022, SARS warned that it was increasing its focus on trusts following its analysis of tax compliance by trusts and beneficiaries – and this focus is now paying dividends, given National Treasury’s boasting this week of better-than-expected tax revenues.

More recently, Health Minister Joe Phaahla said that under the National Health Insurance (NHI) – which was recently passed in parliament in June 2023 – all South Africans will have access to free public and private healthcare, and taxpayers will pay for it.

However, this concentration on wealthy individuals in South Africa – along with poor service delivery, load shedding and high crime rates – scares many of them away from the country as they look to emigrate.

This results in billions lost in tax revenue while at the same time eroding the already shrinking tax base in South Africa.

Responding to a recentparliamentary Q&A, the finance minister said that the phenomenon of ‘mobile higher-income earners’ is well-documented and has been assessed since 2018.

According to the minister, a high proportion of revenue is gathered from upper-income groups – more so than many other peers in the country – as a result of both a relatively high personal income tax exemption threshold and high upper-income rates.

When questioned on the recent tax statistics provided by the South African Revenue Service (SARS) that show that thousands of South Africans have ended their tax residency in the country, the minister said thatover 32,000 people had changed their residence between 2017 and 2021.

Of those individuals, approximately2,700 earned more than R500,000 annually and 1,100 earned more than R1 million annually.

In total, this amounted toR1.3 billion in assessed tax.

Read: How much you need to earn to be middle class in South Africa