EMPLOYEES TAX & PROVISIONAL TAX
EMPLOYEES TAX
Employees tax is required to be withheld MONTHLY from “Remuneration” paid to an employee by
an employer.
The employees NORMAL TAX LIABILITY (as assessed at the end of the year) is then reduced by the
employees tax that has been deducted during the year. IT IS THEREFORE AN UPFRONT PAYMENT OF
TAX.
Definition of “Remuneration”
Includes most forms of payments – learn the list in Silke
Excluded:

Amounts to INDEPENDANT CONTRACTORS eg Lawyers, doctors, accountants

Government Pensions/Grants

Any reimbursements of expenses in the course on employment *

Annuity paid under a divorce/separation order

Subsistence allowance

Royalties
*Remember: A reimbursive TRAVEL allowance is NOT remuneration but ONLY IF
1. the employee does not receive a fixed travel allowance as well,
2. the employee is reimbursed for actual business kms travelled at a rate that is not more than
the fixed rate (currently R3.05 per km) and
3. actual business kms travelled is less than 8000kms per year.
If the above 3 requirements are not met then the whole allowance is treated as remuneration.
(80/20 Treatment – See 2012 Amendments below)
2012 Amendments

Cash equivalent of car as fringe benefit no longer included in remuneration at 100% of value.
Include it at 80 % unless employer is satisfied that 80% of the total use of car is business use
and then it is included at 20%.

A travel allowance is treated in the same manner as the fringe benefit above.
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If an amount is “remuneration” ANY PERSON paying such amount is defined as an employer and
employees tax needs to be withheld by that person. Therefore in the case of an annuity, the
institution paying the annuity has to withhold employees tax.
If the employee received remuneration from more than one employer each employer does a
separate calculation for employees tax.
CALCULATION
Employees tax is calculated on the BALANCE OF REMUNERATION i.e
DEDUCT THE FOLLOWING FROM REMUNERATION:
1. Any pension fund contribution by employee limited to allowable deductions s 11(K)
2. Any RAF contributions in arrears limited to s 11(n) deductions
3.
Any Employer contributions to pension fund as in (1)
4. Life insurance policy i.r.o. loss of income that is deductible i.t.o. ss11(a)
5. Medical aid contribution if younger than 65 limited i.t.o. s18(2)(c)(i)
6. Full medical aid contribution if older than 65
7. Any donation by employer to employee that does not exceed 5% of the balance of
remuneration.
Remember:
Any rebates as well as the tax table are based on ANNUAL income – ADJUST!
If remuneration for a particular month includes an ANNUAL payment like a bonus calculate it
separately as it needs no adjustment.
Part time/casual or temporary employees – no tax table – a flat 25%
Personal Service Providers (companies/cc’s/trusts) – flat 28% (was 33%) unless can prove that 3 or
more independent employees and not more than 80% of income form one client then NO
EMPLOYEES TAX
Independent Contractors (Drs, lawyers, accountants) – no employees tax
Read Silke re Labour Brokers.
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DIRECTORS FEES
Part of remuneration but special rules apply only to directors NOT receiving fixed monthly payments
of salary.
If a director does NOT receive 75% or more of his balance of remuneration in the form of fixed
monthly payments, the following applies:
Employees tax is calculated on the GREATER of

Remuneration actually accrued in the relevant month

Deemed remuneration according to the formula below:
Y = T/N
Y = Deemed remuneration to be determined
T= Balance of remuneration less any extraordinary items in the last year eg: lumo
sums, S8A/B/C gains
N= no of months in last year completed as director
If NO last year as director – use actual balance of remuneration
If an employee in last year – use the employees remuneration for deemed remuneration calculation.
NOTE* If you are forced to use the remuneration of a year that is NOT the previous year of
assessment e.g. when the bonus of the previous year was only finalised late in the current year
ADD 20% on to your deemed remuneration calculation.
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PROVISIONAL TAX
NB: STUDY FLB SUMMARY
Provisional tax is also a prepayment/upfront payment of tax due at the end of the tax year.
Any taxpayer that does not receive remuneration EXCLUSIVELY from a salary and therefore has other
income (not “remuneration”) accruing such as rental income etc. will be a provisional taxpayer. You
can be a provisional taxpayer and also pay employees tax. BOTH AMOUNTS are subtracted off your
assessed tax amount at the end of the year of assessment.
PROVISIONAL TAXPAYERS MUST MAKE TWO OBLIGATORY PAYMENTS:

First – on month 6 of year of assessment

Second – on last day of year of assessment
A THIRD, VOLUNTARY PAYMENT CAN BE MADE AS A ‘TOP UP’ to avoid any shortfall. This will be
made by 7 months after a 28 Feb year end or by 6 months after any other date of year end.
WHAT ARE THE ABOVE PAYMENTS BASED ON?
During every period (6 months) that provisional tax is paid, an ESTIMATE of the taxable income for
the year must be submitted.
First payment: Based on the “BASIC AMOUNT” (see below) or an amount not less than this divided
by 2
Second payment: Based on any estimate not less than the basic amount
Third voluntary payment: Based on the ACTUAL AMOUNT of taxable income calculated by the
taxpayer.
CALCULATION:
DEFINITION OF BASIC AMOUNT:
The amount of taxable income as assessed by SARS in the last year of assessment less any
extraordinary items (must only include regular items – SEE pg 404 Silke)
If any you have to use a previous year of assessment’s amount ADD 8% PER YEAR.
FOR THE FIRST PAYMENT
The normal tax on the basic amount or estimate not less than basic amount ( LESS APPLICABLE
REBATES) DIVIDED BY 2. Remember if it’s a company no rebates are applicable.
LESS
1.Total amount of Employees Tax for Period
2. Certain Foreign taxes (s6quat) for period
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FOR THE SECOND PAYMENT
The normal tax on the basic amount or estimate not less than basic amount (LESS APPLICABLE
REBATES)
LESS
1.Total amount of Employees Tax for year
2. Certain Foreign taxes (s6quat) for year
3. First Provisional Tax Payment
FOR THE THIRD VOLUNTARY PAYMENT
The normal tax on the ACTUAL amount as calculated by the taxpayer for the year ( LESS APPLICABLE
REBATES)
LESS
1.Total amount of Employees Tax for year
2. Certain Foreign taxes (s6quat) for year
3. First Provisional Tax Payment
4. Second Provisional Tax Payment
Because ACTUAL is used, extraordinary items like taxable capital gains will be included here – where
it’s not included in the “BASIC AMOUNT” above.
Learn Penalties and Interest in Silke
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