Sign up with GoogleFrom my understanding the allowance is paid out in cash. They then add it to the earnings on the payslip in order to bring it into account for tax. It's then taken off as a deduction as it has already been paid out.
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Does this payslip make sense?
- Thread starter Ms_S
- Start date
From my understanding the allowance is paid out in cash. They then add it to the earnings on the payslip in order to bring it into account for tax. It's then taken off as a deduction as it has already been paid out.
Here is a copy of the payslip. The travel allowance was actually R8565, and appears under deductions again as 'ADV DED' since it was paid out a few days earlier than the salary.
Is this the right way that he's company is doing things?
The back pay under earnings isn't even back pay. My husband got he's annual increase mid-month, and that is he's earnings under the old rate. Salaries department said that they didn't know what code to use, so they just put it under back pay. That doesn't sound right.
The IOU under deductions is there because a few months ago EVERYBODY was mistakenly paid an extra 90 hours, and now employees have to pay it back over 6 months.
Sinbad
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That looks fine. Travel allowance was paid out, in advance, so they deduct it from the net pay going into his bank account. It still needs to reflect on the payslip.
Would it have made a difference if the travelling was taxed separately on its own payslip? ie would the overall tax have been less if they did it that way?
Yes and no.
If the travel allowance was all he earned then yes, the tax would be lower as his earnings was lower. The allowance is however not his only earnings so the travel allowance has to be added to his total earnings in order to get a taxable amount.
You cannot tax the allowance on its own as the tax is based on your total earnings... so you have to add them all together.
Sinbad
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Bearing in mind that with the right expense vouchers/logbooks/etc that tax should be refunded come assessment time.
Thank you for that. I have a better understanding now.
I'm explaining this to my husband, he argues that the travelling is not an earning, since he only gets it every second month, its an incentive. Also, previously, the travelling allowance was not taxed. This is something they only started now.
Sinbad
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Whether it's an earning or an incentive, it's still money earned and thus taxable.
If he incurs travel expenses for work, he can claim those back against his tax burden come tax season.
IOU- In May they overpaid all the staff by 90 hours. So my husband got something like extra R8000. He is now paying it back over 6 months.
Sick levy- no idea
Co bar- bargaining council
admin- paying the people for doing the payslip?? not sure
Disp/res- no idea
I'm speaking under correction here in regards to travel etc.. allowances, maybe somebody with more knowledge can post here....
A travel allowance is seen as an income. If he however uses it for 'travel' then those travel expenses can be used as a deduction. So if he uses the whole/part of the allowance for travel then he should be able to claim back the tax they took on that whole/part of the allowance.
Here is just a simple example to try and explain it better:
Lets assume a fixed tax rate of 10% just for simplicity:
Salary = R10,000
Travel allowance = R5,000
Total earnings R15,000
Tax at 10% = R1,500
Your husband uses half of the allowance for travel. End of the year he submits his tax return and claims the part used for travel as a deduction. So his return will look something like this:
Total earnings = R15,000
Deductions = R2,500 (half of the R5,000 travel allowance used for actual travel)
Taxable earnings = R12,500
Tax at 10% = R1,250
Actual tax paid = R1,500
Refund to tax payer = R250
So in short, yes they tax him on it but if he does use it for travel then he can claim it as a deduction. If not then its as good as salary and thus an income.
A travel allowance is seen as an income. If he however uses it for 'travel' then those travel expenses can be used as a deduction. So if he uses the whole/part of the allowance for travel then he should be able to claim back the tax they took on that whole/part of the allowance.
Here is just a simple example to try and explain it better:
Lets assume a fixed tax rate of 10% just for simplicity:
Salary = R10,000
Travel allowance = R5,000
Total earnings R15,000
Tax at 10% = R1,500
Your husband uses half of the allowance for travel. End of the year he submits his tax return and claims the part used for travel as a deduction. So his return will look something like this:
Total earnings = R15,000
Deductions = R2,500 (half of the R5,000 travel allowance used for actual travel)
Taxable earnings = R12,500
Tax at 10% = R1,250
Actual tax paid = R1,500
Refund to tax payer = R250
So in short, yes they tax him on it but if he does use it for travel then he can claim it as a deduction. If not then its as good as salary and thus an income.
A lot of he's co-workers don't understand the way its set on the payslip. I'm so scared that a strike will happen next week, because that happens whenever there's a problems with pay!
azbob
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Does he work at a mine?