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BASIC PRINCIPLES OF INCOME TAX
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South African
Revenue Services
Income tax is paid on salaries and wages. If you earn more than a
prescribed amount, then your employer must deduct tax money from your
salary and wages each time you get paid. If you get weekly wages, then
you pay tax every week. If you get monthly wages/ salary, then you pay
tax each month.
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SITE:
In 1988 the new system called SITE was
introduced. SITE stands for Standard Income Tax on Employees. The
employer must make sure that the correct tax is deducted from the
worker's wages or salary, and that it is paid over to the South African
Revenue Services . The Receiver does not refund any overpayments.
SITE applies to any person who earns up to
R60 000 a year (this amount changes every year).
Many employee fall under the SITE system.
Their tax must be worked out by the employer. >>
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The
amount you will pay as income tax:
This depends on:
1. How much you earn (including
overtime or bonuses, and before deductions).
2. Your age (whether you are under
65 or over 65).
3. Whether you are a member of an
officially recognised pension fund or pay towards a retirement annuity
fund. >>
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Information
required by your employers:
When you become employed you must fill in
an IRP2 form. The tax deducted depends on the information that you fill
in on this form.
If you are over 65 years old you must
notify your employer. Also tell the employer if you pay towards a
retirement annuity fund, because you will then pay less tax.
If you do not fill in an IRP2 form at all,
the employer will tax you at the highest possible rate.
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Deductions from SITE:
The amount you pay into a pension scheme or
a retirement annuity fund can be DEDUCTED from your wage before tax is
calculated. This means you will pay less tax, because the tax is worked
out on a lower income.
Under SITE only contributions to a pension
fund or a retirement annuity fund can be deducted from the wage.
Contributions to a Provident Fund cannot be deducted.
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The
rate you will
pay:
After the deduction for pension or a
retirement annuity fund, the rest of your wage is taxed according to
different rates. The rate you pay depends on how much you earn, and is
calculated from tax tables issued by the South African Revenue Services
.
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Rebates:
A rebate is an amount of money taken off
the tax after your tax rate has been worked out. This means the tax you
pay is lower. You can get different types of rebates. There is a primary
rebate and an age rebate.
The primary rebate is deducted off the tax
you owe. >>
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How to work out your tax:
The offices of the South African Revenue
Services have tax tables from which tax is worked out. All
employers are given tax tables and must use them to work out your tax.
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Tax
on bonus pay and retrenchment pay:
Bonus pay is always added to the salary or
wages and then the whole amount is taxed. So the income that is taxed is
higher than the normal salary or wage, and the tax you pay will also be
higher. (For example, let's say you are receiving a salary of R8 000.00
per month. You tax rate and monthly tax will be based on your
annual income of R8 000.00 X 12months. If in the 12th month you
received a bonus of R25 000.00 than your monthly tax and tax rate would
be based on R8 000 X 12months + R25 000.00 ie R121 000.00. This
would affect your rate of tax and the amount you would now have to pay
each month.) >>
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Retrenchment package:
Tax is not paid on the first R30 000.00
of a retrenchment package. >>
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Part-time work and casual work:
Part-time workers who work for less than 22
hours a week are taxed at a rate of 25% unless they declare to their
employers that they have no other paid work. If they have no other paid
work they are taxed in the same way as full time workers.
If a casual worker works for a full day
then she or he must be taxed according to the daily tax tables. If the
worker works for a morning or afternoon or evening, then the rate of tax
is 25% of the wage. >>
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Assessments:
Assessment means checking up on the tax you
pay to make sure you have paid the correct amount. Once a year, your
employer must issue you with an IRP5 tax certificate that shows the
total wages that you earned and the total tax that was deducted.
If you earn less than R60 000 a year, you
will not have to submit a tax return.
If you earn more than R60 000 a year the
South African Revenue Services assesses you when you fill in a
'tax return'. You fill in a tax return form and send it with the IRP5 to
the South African Revenue Services . >>
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Labour Law
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useful links
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retrenchment procedures
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payment on retrenchment
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UIF payments
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UIF benefits |
