The Tax Season for 2020 opened on 1 September 2020. An employer is expected to plan its right to payment of a bonus where none has ever been paid. such payment to its employees. We can therefore calculate the monthly PAYE as: (R40 345.20 – R13 635) / 12 = R2 225.85 The company would need to pay bonuses and thirteenth cheques in accordance with whatever agreement or arrangement has been reached and is recorded in these documents. You can also produce your own bespoke income tax calculation by entering your own income and expenditure for 2018/19 in the South Africa Income Tax Calculator. All rights reserved. 88 as basic salary before deduction This entry was posted in Tax Q&A and tagged Salary / IRP5 , Deductions . Against all odds, government managed to provide for a large scale COVID-19 vaccination campaign without needing to introduce significant new tax … There is no legal obligation for an employer been transferred to a new employer in terms of section 197 of the read more. This could lead to claims of unfair labour practices from the If the company’s documents are silent on the matter, then see above: employees have no statutory entitlement to a bonus or thirteenth cheque. notice and to engage employees on this issue will amount to an Bookmark the permalink. All income tax calculators are based on the tax tables from SARS for the specific period of taxation and this is what is used to work out your tax liability, that is the amount of money you need to pay to SARS.. Donate to a charity: You can donate up to 10% of your taxable income to a SARS registered charity and claim a tax deduction on this donation. bonus is to be paid. Call Centre: 0860 SANLAM / 0860 726526 General Enquiries: +27 (0)21 947 9111 We will deal with the three common types of bonus, namely the Christmas bonus or 13th cheque as it is known, the performance bonus and the production bonus. According to Benjy Porter, the CEO of Legal and Tax, while many employees use the terms “13th cheque” and “bonus” interchangeably, they are not exactly the same. Total tax - R7,457, which equates to a 30% overall tax … All Rights Reserved. New tax year: 7 things employees and employers need to know Most employers and employees in South Africa greeted last month’s Budget Speech with a sense of relief. This salary and tax examples provides an overview of salary deductions followed by the details of the calculations and explanation of how income tax is calculated and deducted from your salary. payment of bonuses or the timing of such payments, then the Calculates income tax, monthly net salary, bonus and lots more. Tempting as it may be to let an annual bonus slip slowly – or quickly in some cases – through your fingers on a big-screen TV or exotic family vacation, it’s far wiser to pay off long-term debt, such as your home loan . You’ll only need to do it once, and readership information is just for authors and is never sold to third parties. If you are one of the lucky people to get a bonus or 13th cheque, be prepared: your joy could be tempered by the big chunk of income tax that the South African Revenue Service (SARS) will grab from your bonus. Get started. You are taxed at the marginal tax rate of 26% on your salary as your annual income equates to R300,000 and you fall within the 26% tax bracket. Assuming a R23,300 13 th cheque is paid in December, the annual taxable earnings will increase to R302,900. Certain forms of income are exempt from tax in South Africa. Joined Jun 12, 2007 Messages 2,959. In South Africa, when calculating the retrenchment payout for a Sales Rep who earns a basic salary plus travel allowance - Answered by a verified Lawyer We use cookies to give you the best possible experience on our website. The R35,000.00 salary income tax calculation uses default setting to illustrate Medical, Pension and PAYE deductions. where an employment agreement is silent on the payment of a bonus We call this 'provision for tax on annual bonus'. EasyBiz Technology Tax Calculator skip to Main Content EasyBiz Technologies is the authorised Intuit QuickBooks local partner in South Africa Mail an expert: info@easybiztech.co.za Speak to an expert : +27 (010) 203 4300 QuickBooks Online User Login This page contains a list of countries in Africa that iCalculator provides free online tax and salary calculators for. performance or simply as gratuity for loyal service throughout the To print this article, all you need is to be registered or login on Mondaq.com. Please contact us if you would like to have additional features added to the South Africa Tax Calculator, changes are free, our aim is to facilitate free tax calculations across the globe, all we ask is your support and feedback. Many South African companies now offer employees performance bonuses instead of thirteenth cheques. The pro rata 13th Cheque should be calculated from the date on which the member received his/her last 13th Cheque to the last day of service. We will be able to determine your exact payment after a tax consultation. Not only are performance bonuses seen as more motivating for employees, but these bonuses can be determined based on influencing factors such as … Salary Tax Calculator: calculate how tax changes will affect your pocket. The employer must consult with the affected employees or their salaries and are classified as benefits of the employment contract. engage it on the proposed changes. year. wishes to discontinue such payment or make any other change However, where an employer has paid bonuses in the past and If you were unpleasantly surprised by the tax bill on your 13th cheque, change the way you structure your salary package so you lessen the tax impact. Usually, the amount is taxed when it is paid out. However, some companies allow employees to pay additional tax during “normal” months, and then the bonus / 13th cheque is seen to be “tax free”. These are set out in Section 10 of the 1962 Income Tax Act South Africa. There may exist exceptional circumstances where the right to The courts have summarised the position regarding bonuses as sufficient for an employer to inform its employees two weeks before Calculates income tax, monthly net salary, bonus and lots more. Salary / IRP5 ... Cape Town, South Africa | Site secured by … How you tax 13th cheque bonus if you earn 14560. You can also produce your own bespoke income tax calculation by entering your own income and expenditure for 2018/19 in the South Africa Income Tax Calculator. New Initiatives For Private Sector Workers To Launch In March 2021, (Un)lawfulness In Labour Disputes: The Door Is Tightly Closed, Overview Of Employment Related Laws In Nigeria, New Electronic Platform Introduced For Job Seekers, Adjustment Of The Minimum Wages In Terms Of The National Minimum Wage Act, COVID-19: Continued TERS Relief In South Africa For Certain Categories Of Employees And Revised Reduced Work Time Benefit, POPIA Regulations And Guidelines To Develop Codes Of Conduct, Protection Of Personal Information Act FAQs, Unpacking Sexual Harassment In The Workplace, International Transfer Pricing Trends from a Swiss Perspective - Practical Tips and Lessons Learned, Survival Kit for the Latest Trends in U.S Trade Enforcement, © Mondaq® Ltd 1994 - 2021. been made. then the issue is subject to the discretion of the employer or Tools Tax Calculator Thank you Sanlam in a Nutshell Frequently Asked Questions Ernie Els Experience Thank You online-quote swiper-test growth balance banner-test Income Tax Calculator Calculate your annual and monthly income tax deductions according to your age and monthly salary, and compare these to last year’s deductions. finances in a way that enables it to know in advance that it will The percentage of tax payable does change, but only for the amount that is in the next tax bracket. The 13th month pay calculator that we have created would be beneficial especially for those employees who have been employed by the company for less than a year because, the amount of the 13th month pay will be pro-rated (will depend on the number of days or months of service). 2016 Tax Calculator 01 March 2015 - 29 February 2016 ( / ) Period. Age. Also, keep in mind you will only receive a 13th cheque or performance bonus if it’s guaranteed in your employment contract. By using our website you agree to our use of cookies as set out in our Privacy Policy. His total taxable income of R213 600 puts him in a tax bracket of R189 881 – R296 540 which means that he will need to pay R34 178 + 26% of the amount above R189 880 which equals R40 345.20. The formula to calculate your base tax liability is simple: Base Tax Liability = (Total annual income x tax bracket percent ) + additional tax payment if applicable – tax rebate You don’t have to invest your entire 13th cheque in your home loan; just a portion of it can make a difference. M. mr_norris Expert Member. Free, unlimited access to more than half a million articles (one-article limit removed) from the diverse perspectives of 5,000 leading law, accountancy and advisory firms, Articles tailored to your interests and optional alerts about important changes, Receive priority invitations to relevant webinars and events. Namibia is situated on continental Africa’s western coast, bordered to the north by Angola and Zambia and to the east and south by Botswana and South Africa. Employees’ Tax refers to the tax required to be deducted by an employer from an employee’s remuneration paid or payable. Example salary illustrations for South Africa including Income Tax and expense deductions. Posted 7 January 2014 under Tax Q&A How do I calculate PAYE on a 13th cheque ... Let Tim submit your tax return direct to SARS in just a few clicks! Failure to provide adequate follows: The content of this article is intended to provide a general Benefits do not create statutory rights or entitlement, and “This can be done with a cash windfall, such as from an annual tax refund, 13th cheque or bonus, or inheritance.” So if you put R30 000 towards your home loan when you get your tax refund, all of your payments from there on out are a little more effective, because less … (7) If a member dies while in service, the Executing Authority shall pay the 13th Cheque (calculated proportionally) directly – Often, this is in the form of a 13th cheque, but this is not always the case. The Labour Court has previously decided that it is not Budget 2021/22 – Tax thresholds and seven tax brackets for individuals Budget 2021/22 – PROPOSED AMENDMENTS IN RELATION TO CONTROLLED FOREIGN COMPANIES Budget 2021/22 – CEASING SOUTH AFRICAN TAX RESIDENCY AND TAXATION OF … representative trade union once the decision not to pay bonuses has We call this 'provision for tax on annual bonus'. This may happen where the employer employment agreement. 13th cheque, which is common practice across most of Africa. Now, René, a 13th cheque is of course not written into South African labour law, so there is no obligation for companies to provide these cheques. Add as a plugin or widget to any website! How do I calculate PAYE on a 13th cheque This entry was posted in Tax Q&A and tagged Salary / IRP5. As with a 13th cheque, the bonus might take an individual into a higher tax bracket, resulting in higher than usual deductions in the month it is granted. Contracts of employment specifically provide conditions under which employees will be entitled to the payment of bonuses. Accordingly, an employee has no POPULAR ARTICLES ON: Employment and HR from South Africa. The investment term and savings period is assumed to be from your current age to age 65, unless you are over 55. continue paying the bonuses as it has done in the past. Dec 13, 2013 #12 What I did was grab the PAYE tax tables and check what the tax … This means that you can pay tax on a monthly portion of the bonus you are going to receive instead of paying all the tax in the bonus month. Simply enter your current monthly salary and allowances to view what your tax saving or liability will be in the tax year. advise them of its situation and to engage them on the issue to You have 3 employees, who qualify, each earning R5 000 a month. operational requirements of its business, or where employees have Mondaq uses cookies on this website. Whilst travelling into work I was concerned to hear an interview with the chairperson of the South African Institute of Accountants. therefore amounts which are additional to employees' discontinue payment of the bonuses. © Mondaq® Ltd 1994 - 2021. Download. As the year comes to an end, many employees will be expecting This bonus is normally classed as a gratuity - in other words, a payment of gratitude by the employer to the employee in recognition of a job well done, or if you like, going the extra mile. The Saudi Council of Ministers has approved a new database called the United National Employment Platform to help job seekers. Specialist advice should be sought A useful tax calculator. regarding the payment of bonuses, such as new conditions for the I have been contributing to UIF for the past 15 years without claiming and would like to know if that would be taken into concideration when the payments are On 8 February 2021 the Minister of Employment and Labour, Thembelani Waltermade Nxesi, also published a Government Gazette. The 13th cheque is really an African thing, because many of the African countries also provide base salary plus add-on, and then a 13th cheque on … Tax residents can make the following deductions from their taxable income in South Africa: Tax threshold allowance of R83,100 (R128,650 for those aged 65–74 and R143,850 for those aged 75 and over) Our tax tables (in South Africa) are structured in such a way that if you earn more before tax, you will earn more after tax too. 2018 Tax Calculator 01 March 2017 - 28 February 2018 ( / ) Period. guide to the subject matter. to pay bonuses to its employees. Daily Weekly Monthly Yearly Periods worked. • Medical contribution in line with the tax caps determined by the Minister of Finance; • 13th Cheque (service bonus) calculated as 1/12 of the ... (NIA/SASS), Secret Service, uniformed members of the South African Police Service (SAPS), the South African National Defence Force (SANDF) and Correctional Services. If you are looking for salary and tax calculators in a different continent, you can find them in our main international salary and tax calculators page.. The failure of an employer to consult with its employees This means that the first R500 000 is not subject to tax, the next R200 000 is taxed at 18%, the subsequent R350 000 at 27% and all amounts above R1 050 000 at 36%. pro rata share of the employee's monthly salary. employee's full month's salary or the bonus may be a You will be able to choose a manual amount or an amount equal to the employees fixed wage (13th cheque) If you are only loading the bonus in December, you can select no provision for tax … Malapane says that if your contract stipulates that you will receive a thirteenth cheque, then monthly contributions can be made as part of your salary deductions to offset the tax implications of the bonus. South Africa: It Is Not Compulsory For An Employer To Pay A 13th Cheque To Its Employees 07 December 2011 by Lavery Modise about your specific circumstances. They have been employed from 1 January 2014. It’s so easy to use. Free Namibian income tax calculator. employer and employee, but the employer decides that it cannot make Section 91 of the Labour Act goes further to exclude certain categories of persons from the above definition and, thereby, from the provisions of the Labour Act. *Whilst all reasonable endeavours have been taken by EasyBiz Technologies to ensure the accuracy of the tax calculations inherent in this tool, EasyBiz Technologies cannot guarantee the accuracy of the results of calculations provided since minimum information is utilized. Bear in mind that the income tax deductible will be greater than normal – ask the employer for an estimate from the applicable tax tables. negotiation between the employer and employee, whether or not a It bears mentioning that anyone who gets a 13th cheque in the current economic climate is very lucky indeed. The 13th cheque or Christmas bonus. payment of a 13th cheque or Christmas bonus from their employer. SARS allows you to spread the tax on a guaranteed bonus over the tax year. of beneficiaries (including main member). Income tax calculator. Daily Weekly Monthly Yearly Periods worked. where the employer has previously paid bonuses to its employees, as The subject of this discussion is when to recognise an accrual for bonuses and when a provision. The flexible remuneration packages may be structured for benefits such as motor vehicle allowance, medical assistance, housing allowance, non-pensionable cash allowance and 13th cheque. Spend the 13th cheque wisely. benefits, unless a right to such benefit has been created in the Find more information for SMS level benefits (.pdf) and OSD level benefits (.pdf) on the DPSA website . will amount to a unilateral variation of the employment contract. According to Jetro Malapane, member of the Executive Committee of the South African Payroll Association (SAPA) it is important to understand the difference between a 13th cheque and a performance bonus. Either way, the bonus will increase the annual income earned by the employee. As from 1 March 2015 interest from a South African source paid to a non-resident will be taxed at a final withholding tax rate of 15%. Under 65 Between 65 and 75 Over 75 Income.