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GUIDE FOR EMPLOYERS IN RESPECT OF TAX DEDUCTION TABLES (2014 TAX YEAR) PAYE-GEN-01-G01 Revision: 5
DISCLAIMER
The information contained in this guide is intended as guidance only and is not considered to be a legal reference, nor is it a binding ruling. The information does not take the place of legislation and readers who are in doubt regarding any aspect of the information displayed in the guide should refer to the relevant legislation, or seek a formal opinion from a suitably qualied individual. For more information about the contents of this publication you may: Visit the SARS website at www.sars.gov.za Visit your nearest SARS branch Contact your own tax advisor/tax practitioner If calling from within South Africa, contact the SARS Contact Centre on 0800 00 SARS (7277) If calling from outside South Africa, contact the SARS Contact Centre on +27 11 602 2093 (only between 8am and 4pm South African time).
PURPOSE
The purpose of this document is to assist employers in determining the amount of Employees Tax to be deducted from remuneration paid/payable according to the prescribed tax deduction tables.
SCOPE
This basic guide is issued by the South African Revenue Service (SARS) to employers to assist them in calculating the amount of Employees Tax deductible from the remuneration including variable remuneration paid/payable to employees and must be applied by the employer. It further explains the different methods that employers are allowed to apply.
REFERENCES
3.1 LEGISLATION
TYPE OF REFERENCE Legislation and Rules administered by SARS: Other Legislation: REFERENCE th Paragraph 9(1), (2) and 10 of the 4 Schedule of the Income Tax Act No.58 of 1962 Tax Administration Act No. 28 of 2011: Section 1 None
GUIDE FOR EMPLOYERS IN RESPECT OF TAX DEDUCTION TABLES (2014 TAX YEAR) PAYE-GEN-01-G01
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Employee
Employer
Net remuneration
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GUIDE FOR EMPLOYERS IN RESPECT OF TAX DEDUCTION TABLES (2014 TAX YEAR) PAYE-GEN-01-G01
EFFECTIVE DATE 2013.06.07 PAYE Relevant material Pay-As-You-Earn As defined per section 1 of the Tax Administration Act means any information, document or thing that is foreseeable relevant for tax risk assessment, assessing tax, collecting tax, showing non-compliance with an obligation under a tax Act or showing that a tax offence was committed The South African Revenue Service As defined per section 7B of the Income Tax Act means overtime pay, bonus or commission contemplated in the definition of remuneration th in paragraph 1 of the 4 Schedule The year of assessment for taxpayers covers a period of 12 months. For individuals and trusts, the commencement date of the year of assessment starts on 1 March and ends on the 28/29 February each year. For Companies and Close Corporations the year of assessment is the applicable financial year.
Year of Assessment
Meaning
In the absence of a tax directive to the contrary as prescribed in Paragraphs 10 and th 11 of the 4 Schedule of the Income Tax Act, employers must make use of the deduction tables prescribed by the Commissioner or use the statutory rates as an alternative. The new tax rates must be implemented by employers as soon as possible as contained in the Government Gazette by no later than 1 April of a tax year and Employees' Tax must be calculated according to these rates. Any over deduction of Employees' Tax arising as a result of the implementation of new rates not in the employers possession on 1 March of each new tax year, may be refunded to the employee as soon as new rates (tables) are implemented. Any under deduction of Employees' Tax arising as a result of the implementation of new rates not in the employers possession on 1 March of the new tax year, may be adjusted over the remainder of the new tax year (from the date of implementation until 28 February).
If an employee leaves your employment after 1 March of the new tax year but before the implementation of the new rates, the Employees' Tax deductions made in accordance with the previous rates are regarded as final. Rebates for individuals which are prescribed in section 6 of the Income Tax Act are deducted from the normal tax determined according to the statutory rates of tax.
GUIDE FOR EMPLOYERS IN RESPECT OF TAX DEDUCTION TABLES (2014 TAX YEAR) PAYE-GEN-01-G01
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0 165 600 165 601 258 750 258 751 358 110 358 111 500 940 500 941 638 600 638 601 and above
Tax rebates individuals Primary rebate Secondary rebate (for persons 65 years and older) Tertiary rebate (for persons 75 years and older) Medical Scheme Fees Tax Credit for persons below 65 years (see details below)
Tax thresholds individuals (before taking any Medical Scheme Fees Tax Credit into account) Persons under 65 years R 67 111 Persons 65 years and older R104 611 Persons 75 years and older R117 111 The rebates for individuals must be deducted from the normal tax determined according to the statutory rates of tax. The primary rebate is deductible for all individuals. The secondary rebate may only be applied for individuals who will be 65 years or older on the last day of the relevant year of assessment. The tertiary rebate is deductible only for individuals who will be 75 years or older on the last day of the relevant year of assessment. With effect from 1 March 2013, the Medical Scheme Fees Tax Credit for individuals is a credit which applies in respect of contributions paid by the taxpayer, who will be below 65 years on the last day of the year of assessment, to a registered medical scheme. The amount of the credit is based on the following values per month in the year of assessment in respect of which the contributions were paid in respect of the taxpayer himself/herself, his/her spouse and any dependant of the taxpayer. R 242 R 242 R 162
Medical scheme fees tax credit for taxpayers under 65 years of age For the taxpayer For the first dependant For each additional dependant
GUIDE FOR EMPLOYERS IN RESPECT OF TAX DEDUCTION TABLES (2014 TAX YEAR) PAYE-GEN-01-G01
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Weekly tables
Fortnightly tables
A fortnightly remunerated employee under the age of 65 receives a fortnight wage of R4 980 and contributes R120 to a pension fund and R50 to a retirement annuity fund as well as R80 to a registered medical scheme in respect of himself/herself and one dependant. Fortnight wage ................................................................................ Less: allowable pension fund contributions .................................... Less: allowable retirement annuity fund contributions .................... Balance of remuneration ................................................................ Employees Tax on balance of remuneration according to the fortnightly tables. Less: Medical Scheme Fees Tax Credit (R242+R242 p/m 2 weeks) . Amount of Tax to be deducted . 4 980 120 50 4 810 402 242 160
Monthly tables
A monthly remunerated employee under the age of 65 receives a salary of R11 500 and contributes R375 to a pension fund and R125 to a retirement annuity fund as well as R80 to a registered medical scheme in respect of himself/herself and one dependant. Monthly salary ................................................................................ Less: allowable pension fund contributions .................................... Less: allowable retirement annuity fund contributions .................... Balance of remuneration ................................................................ Employees Tax on balance of remuneration according to the annual tables Less: Medical Scheme Fees Tax Credit (R242+R242 pm). Amount of Tax to be deducted . 11 500 375 125 11 000 974 484 490
Annual tables
An employee under the age of 65 received a salary (retirement funding income) of R10 500 per month and contributes R250 per month to a pension fund as well as R80 per month to a registered medical scheme in respect of himself/herself and one dependant. Annual salary (R10 500 x 12) ......................................................... Less: allowable pension fund contributions .................................... Balance of remuneration ................................................................ Employees Tax on balance of remuneration according to the annual tables Less: Medical Scheme Fees Tax Credit (R242+R242 pm x 12). Amount of Tax to be deducted . 126 000 3 000 123 000 10 072 5 808 4 264
QUALITY RECORDS
GUIDE FOR EMPLOYERS IN RESPECT OF TAX DEDUCTION TABLES (2014 TAX YEAR) PAYE-GEN-01-G01
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10 DOCUMENT MANAGEMENT
Designation Business Owner: Policy Owner: Author: Detail of change from previous revision: Template number and revision: Name/Division GE Enterprise Business Enablement GE Enterprise Business Enablement P Khoncha Updated to include 2013 Budget Speech changes POL-TM-07 - Rev 3
GUIDE FOR EMPLOYERS IN RESPECT OF TAX DEDUCTION TABLES (2014 TAX YEAR) PAYE-GEN-01-G01
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