BASIC PRINCIPLES OF INCOME TAX
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. >> more information
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. >> more information
This depends on:
1. How much you earn (including overtime or bonuses, and before deductions).
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. >> more information
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. >> more information
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 . >> more information
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. >> more information
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. >> more information
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.) >> more information
Tax is not paid on the first R30 000.00 of a retrenchment package. >> more information
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. >> more information
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 . >> more information
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