South Africa were dismissed for 149, their lowest-ever Cup total as Tait finished with 4-39 while man-of-the-match McGrath took 3-18.
Australia then raced to the target with more than 18 overs to spare despite losing Adam Gilchrist and skipper Ricky Ponting early in the innings.
They will now meet Sri Lanka at Barbados on Saturday, a repeat of the 1996 Cup final at Lahore when the islanders beat Mark Taylor's Australians by seven wickets.
Australia are now unbeaten in their last 28 Cup matches and are aiming to become the first team in tournament history to complete a hat-trick of titles. They were the champions in 1999 in England and 2003 in South Africa.
Australia owed their fourth successive appearance in the final to McGrath and fast-improving Tait, who virtually turned the match into a no-contest after reducing South Africa to 27-5 in the opening 10 overs.
In-form Michael Clarke (60 not out) and Matthew Hayden built on the duo's superb efforts with a 66-run stand for the third wicket to ensure an easy win in front of jubilant Australian fans at the Beausejour Stadium.
Hayden also became the first batsman in the tournament to complete 600 runs during his 60-ball 41.
Clarke smashed eight fours in his 86-ball innings.
South Africa's slim chances of making their first appearance in the final after a spineless batting performance depended on early wickets, but they could grab just two before running into Hayden and Clarke.
Gilchrist was the first to go, bowled by a Charl Langeveldt delivery that swung back to rattle the stumps. The South African bowler came close to getting the wicket of Ponting, but Ashwell Prince dropped the catch at square-leg.
Ponting was then on four, but could not capitalise on the chance as he was bowled by fast bowler Andre Nel after contributing 22.
Australia earlier piled on the pressure from the first over, with McGrath, Tait and Nathan Bracken testing the batsmen with a probing line and length.
McGrath, playing in his last World Cup, became the tournament's highest wicket-taker with 25 in 10 matches, surpassing Sri Lankan off-spinner Muttiah Muralitharan (23).
Justin Kemp (49 not out) and Herschelle Gibbs (39) alone offered some resistance, helping their team add 122 runs for the last five wickets.
Gibbs fell to a soft dismissal, caught behind off Tait after adding 60 for the sixth wicket with Kemp which was the highest stand of the innings.
Gibbs, keen to make amends for a dropped catch that allowed Steve Waugh off the hook at the 1999 tournament, hit six fours in his 49-ball knock.
South Africa's last Cup semi-final against Australia ended in a thrilling tie in 1999, but this time they capitulated.
It all began with in-form skipper Graeme Smith, who tried an ambitious shot early in the innings. He took a few steps out of the crease, but failed to connect and saw his off-stump knocked back by a Bracken delivery.
It was again a poor shot-selection that led to the dismissal of key batsman Jacques Kallis, who was bowled while attempting to steer on bent knees a fuller-length delivery from McGrath.
The Australian fast bowler was on a hat-trick in his fifth over when he had Ashwell Prince caught by wicket-keeper Adam Gilchrist, and Mark Boucher by Matthew Hayden at first slip.