Bonus calculation

[cooler1987]

Hi,

i'm receiving a bonus pay out this month. I would like to calculate the tax that will be deducted from the bonus. My gross is R26500, bonus will be 120%.

What will the final amount be?

 

[Messugga]

http://www.sars.gov.za/Tax-Rates/Income-Tax/Pages/Rates%20of%20Tax%20for%20Individuals.aspx

Taxable income (R) ​Rates of tax (R)
0 – 189 880 18% of taxable income
189 881 – 296 540 34 178 + 26% of taxable income above 189 880
296 541 – 410 460 61 910 + 31% of taxable income above 296 540
410 461 – 555 600 97 225 + 36% of taxable income above 410 460
555 601 – 708 310 149 475 + 39% of taxable income above 555 600
708 311 – 1 500 000 209 032 + 41% of taxable income above 708 310
​1 500 001 and above ​533 625 + 45% of taxable income above 1 500 000

You're on R318k pa. So your bonus will get taxed at 31%

 

[cooler1987]

so what you saying is the following:

26500 *31% = 9858

 

[Jehosefat]

so what you saying is the following:

26500 *31% = 9858

Well 26500*120%*31% = 9858 (you left out the 120%)

 

[xrapidx]

Not entirely correct, it has to be adjusted to his annual income , so if the bonus hasn't been worked into his annual package, he'll pay a bit more on the bonus to bring it inline with his annual tax. (So about 9858)

 

[werfie]

Unfortunately it's not that simple. To get an accurate amount, you will need to look at the figures on last month's payslip. In addition to your gross, you need to take into account what additional taxable benefits or tax deductibles there were, then you have to annualise it, perform a calc on the tax table to get the annual tax amount, then add the bonus to the already annualised amount and perform a second calculation, the difference between the two calcs will be the tax amount on bonus.

 

[Jehosefat]

Unfortunately it's not that simple. To get an accurate amount, you will need to look at the figures on last month's payslip. In addition to your gross, you need to take into account what additional taxable benefits or tax deductibles there were, then you have to annualise it, perform a calc on the tax table to get the annual tax amount, then add the bonus to the already annualised amount and perform a second calculation, the difference between the two calcs will be the tax amount on bonus.

That will only make a difference if for some reason his bonus ends up falling across two tax brackets. Which is unlikely given where the brackets are relative to his salary. So it might not be 100% accurate but it should be pretty damn close.

 

[^^vampire^^]

(monthly salary * 12) + (monthly salary * 1.2) = new yearly salary
(26500 * 12) + (26500 * 1.2) = new yearly salary
318000 + 31800 = 349 800

Tax prior to bonus = R57360.83333333 monthly = R68833 yearly
Tax after bonus = R6557.583333333 monthly = R78691 yearly
Tax shortfall from bonus = (R78691 - R68833) = R9858
Bonus nett = bonus gross - tax shortfall
Bonus nett = R31800 - R9858 = R21942

This is if you only have salary and no other taxable components. In practice think of getting 50% out of your bonus after tax and anything above that is a bonus on your bonus :crylaugh: