Freelancer and PAYE

[Idiosyncratic]

So I was wondering, if you're a freelancer or contract worker, my understanding is that should 75% or more of your income come from one source, then they (the source) have to register you for PAYE... Which sucks, because what if you're working for several clients, but happen to have a very high value one which provides this magic 75%, but said client may be unwilling to register you? Or, what if it's an international client (which I hear in the case of freelancers or contract workers it often is), what then? They're not registered in SA, but to legally employ or pay tax they have to register a branch with CIPC. That's a no-no if they're just using a single freelancer used for one purpose....and what if this changes from year to year (your biggest source of income)?

 

[JayM]

You could register a company and let the company employ you. It will of course have to register for PAYE, VAT (if turnover > R1M) and do all statutory returns. Your clients may favour this option in fact - it will get them more BEE points than hiring you directly.

 

[RedViking]

As a Freelancer for the last 10 years I had the same issue. All my clients are in other countries and have no reason to open a company in SA or need the hassle. SARS was of no help and was very eager to get my tax but couldn't tell me how. I get most of my work from one company who pays directly to my account and then all the other clients use Paypal. I eventually just registered for provisional tax. So I can estimate what my income is for each period and then I just keep track and add whatever else comes in. To make it easier for myself I have a tax firm who does all my returns and keep track of what should be submitted / claimed etc.

http://www.sars.gov.za/TaxTypes/PT/Pages/default.aspx

So basically it is easy:
1. Get a tax number.
2. Register for SARS eFiling
3. Request and submit an IRP6 return via eFiling

 

[Idiosyncratic]

As a Freelancer for the last 10 years I had the same issue. All my clients are in other countries and have no reason to open a company in SA or need the hassle. SARS was of no help and was very eager to get my tax but couldn't tell me how. I get most of my work from one company who pays directly to my account and then all the other clients use Paypal. I eventually just registered for provisional tax. So I can estimate what my income is for each period and then I just keep track and add whatever else comes in. To make it easier for myself I have a tax firm who does all my returns and keep track of what should be submitted / claimed etc.

http://www.sars.gov.za/TaxTypes/PT/Pages/default.aspx

Wait, so if you're registered for provisional tax the 75% thing falls away?

 

[RedViking]

Wait, so if you're registered for provisional tax the 75% thing falls away?

I'm not sure where you get the 75% from or I'm not familiar with it. I think that is probably if you are working for two companies and benefiting from both of the companies (pension fund etc.) in SA.

Basically you work for yourself and a company or companies make use of your services. Depending on your arrangements you will probably also invoice them. So by registering for provisional tax you just declare all your income and get taxed by the total income you get for the year. You can also claim back on office expenses, office space, electricity, airtime etc.

I suggest maybe go see an Accounting firm and they will advice what to do.

 

[AchmatK]

I suggest reading up on Interpretation Note 17 No3.



http://www.sars.gov.za/AllDocs/Lega...7 - Employees Tax Independent Contractors.pdf



Also read the PAYE guide for employers.

http://www.sars.gov.za/AllDocs/OpsD...o Employees Tax for 2018 - External Guide.pdf


From 14.2 page 30



Not applicable to companies not registered in South Africa. Also creating a company does not always get around this.

 

[Idiosyncratic]

I'm not sure where you get the 75% from or I'm not familiar with it. I think that is probably if you are working for two companies and benefiting from both of the companies (pension fund etc.) in SA.

Basically you work for yourself and a company or companies make use of your services. Depending on your arrangements you will probably also invoice them. So by registering for provisional tax you just declare all your income and get taxed by the total income you get for the year. You can also claim back on office expenses, office space, electricity, airtime etc.

I suggest maybe go see an Accounting firm and they will advice what to do.

Actually seems it's 80%.

 

[RedViking]

Not applicable to companies not registered in South Africa. Also creating a company does not always get around this.

I've never done work for an SA company, probably why I'm not familiar with all PAYE requirements. Will give those files a read. It makes sense that if you work for an SA registered company that you need to register for PAYE, basically you will then be a contractor. But it shouldnt be a problem because an SA company should already be registered with SARS anyways. It will be a mess if the government starts FORCING all South Africans who work for international companies to get those companies to register in SA, but then again nothing surprise me anymore. Why the hell do they have to make things so complicated. They also sometimes block my payments because they want to know exactly why I'm getting payed and for what. A simple phone call solves this. Maybe I should just tell them I import cookie jars.

 

[RedViking]

Actually seems it's 80%.

Will check it out.

 

[SweetFennyAdams]

Bugger SARS if you earn money from freelancing with foreign firms.


Apply for a free Payoneer account.
You can bill companies through Payoneer and have them deposit money into your offshore account.
You receive a free Payoneer Master Card debit card, linked to your Payoneer account.
You can then use the card to withdraw cash from ATMs, or to pay for stuff in shops locally without using a local bank.

My card arrived in my postbox 10 days and my account was setup in 5 minutes after registering the card online.

SARS will have no way of knowing you have this financial instrument, or any means to access and track it.

 

[RedViking]

Bugger SARS if you earn money from freelancing with foreign firms.


Apply for a free Payoneer account.
You can bill companies through Payoneer and have them deposit money into your offshore account.
You receive a free Payoneer Master Card debit card, linked to your Payoneer account.
You can then use the card to withdraw cash from ATMs, or to pay for stuff in shops locally without using a local bank.

My card arrived in my postbox 10 days and my account was setup in 5 minutes after registering the card online.

SARS will have no way of knowing you have this financial instrument, or any means to access and track it.


View attachment 438678

This depends on which side of the law you want to be. The question is not how to avoid tax, but rather, how to be taxed.
Will check out Payoneer, rates, exchange rate etc.