Secondly, calculate the total estimated income tax liability for the current tax year on the estimated total taxable income using the table below for the 2023/24 tax year and deduct the appropriate tax rebate.Firstly, estimate the total taxable income for the current tax year by combining all your salaries and pensions.To enable one or more employers or pension funds to deduct additional PAYE the following steps are required: Option 2 – increasing the amount of PAYE deducted by a specific employer or pension fund 65 years and older but under the age of 75
Recommended percentage at which tax is to be deducted by employers for the 2024 tax year (1 March 2023 to 29 February 2024 For example, if there are three employers paying a salary, then all three should deduct tax at the same percentage.Ĭombined taxable income from all sources Thirdly, request the employers to apply (as a minimum) the applicable percentage at which to deduct PAYE from the salary paid by each of them.This table is simply an estimate of the tax liability, and it is still possible that there may be an under or over recovery of tax when using these percentages. The table sets out the percentage at which tax should be withheld at the various combined taxable income levels. Secondly, identify the recommended percentage at which tax should be deducted, based on the combined estimated taxable income by referring to the table below.Firstly, estimate the total taxable income for the current tax year by combining all your salaries.To enable the employers to implement additional PAYE deductions the following steps are required: Option 1 – increasing the percentage at which PAYE is deducted by all employers The taxpayer may need assistance from SARS, their tax practitioner or the payroll personnel at their employer. The second option is to increase the amount of PAYE deducted by one or more employers but is slightly more complex to calculate.The first option is a simplified mechanism which involves applying a single percentage at which PAYE should be deducted by all employers that pay a salary to the taxpayer.
MONTHLY GROSS RECEIPTS EXAMPLE HOW TO
How to arrange for a voluntary additional PAYE deductionĪ taxpayer has two options to voluntarily pay more PAYE: In this way a taxpayer is able to reduce the additional amount of tax payable when the annual income tax return is assessed.
A provisional taxpayer may instead pay a higher amount of provisional tax. Taxpayers receiving a salary may make a written request to one or more employers to deduct additional monthly PAYE. To assist taxpayers who are in this situation, the Income Tax Act allows a taxpayer to make additional voluntary tax payments. This results in a large amount that has to be paid in on assessment because too little tax was deducted monthly by way of PAYE. Additional amount of tax to be paid on assessmentĪs you can see, after submission of the annual income tax return by this individual, the total tax liability on assessment is significantly higher than the total PAYE that was correctly deducted by the employers during the year. Less: Tax paid in the form of PAYE withheld by employers A and B The table below gives an example of how the combined taxable income is calculated in the case of a taxpayer who is over the age of 65 years and receives a salary of R240 000 from employer A and a salary of R160 000 from employer B during the tax year. When all the sources of income are added together and the correct tax rate is applied this may result in an additional amount of tax to be paid on assessment. However, where more than one employer is involved, each of them deducts the correct amount of PAYE on only the salary they each pay. Typically this should result in no extra tax due on assessment. When only one employer is involved, the total PAYE deducted monthly should be equal to the tax liability on assessment. A progressive tax rate system means that the more income is earned, the higher is the marginal tax rate and more tax is paid on assessment.īy deducting PAYE every month, the employer is assisting a taxpayer to pay his or her tax liability, determined on assessment, in advance. The South African tax system is based on the principle of adding together all sources of income of a taxpayer into a single sum, and applying a progressive tax rate table to determine the final tax liability of the taxpayer on assessment. The reason for this is the manner in which a taxpayer’s tax liability is calculated on assessment.
Taxpayers who receive income from more than one source of employment are reminded that the employees’ tax (PAYE) deducted by the respective employers may not be enough to cover their final tax liability on assessment. What to do if you receive income from two sources?
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