How to keep PAYE low?

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SpartanX

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Hi Guys

Whats the best way to keep PAYE low for employees (and my self)?

I started deducting PAYE last month, and everyone is complaining (my self included). It really does feel way too much.
I've noticed it's worse with overtime.
I'm using FNB's payroll system and does the calculations. I also noticed if I split the basic salary, and put a certain amount under "taxable allowance", the tax becomes just a bit low. There's also "no taxable allowance", not sure if I wont get in trouble if I use that for "no reason".

Thanks for any help!
 
SARS had introduced the Employer Tax Incentive (ETI) to encourage employees to employ unemployed youth. You can offset they PAYE the company pays by up to R2 000 per month per qualifying unemployed youth. Doesn't affect the PAYE deducted from employees though. It really is however a very minimum salary that can be paid before ETI cannot be claimed.

And as mentioned above, get a professional to do your payroll. It can get tricky when you have to submit IRP5 certificates and if that's wrong, your employees will get even more upset if they cannot get a tax refund due to incorrect IRP5 certificates.
 
SpartanX said:
Hi Guys

Whats the best way to keep PAYE low for employees (and my self)?

I started deducting PAYE last month, and everyone is complaining (my self included). It really does feel way too much.
I've noticed it's worse with overtime.
I'm using FNB's payroll system and does the calculations. I also noticed if I split the basic salary, and put a certain amount under "taxable allowance", the tax becomes just a bit low. There's also "no taxable allowance", not sure if I wont get in trouble if I use that for "no reason".

Thanks for any help!
Click to expand...


OK a few things

Some context would be useful...
- What kind of salary ranges are applicable?
- Do the staff have to use their cars for business (not to and from work)
- Do your staff pay their own medical aid (and retirement investments)

Now the bad news
1. Overtime isnt worse because its overtime.
... It is just that we have marginal tax so every rand of overtime is at the marginal rate. Same with a salary increase
2. We may have screwed up govt departments but SARS knows its stuff.
3. Dont screw with the payroll. Keep it legal

The good news (well not very good)
1. If your staff pay medical aid you can enter it into the payroll as the EMployee Paid Allowance
Depends on the medical aid but most are tax deductible a bit
Ask your staff for proof of their contributions

2. Retirement funding is easy -R/As etc. You can contribute up to 25% of your pay into retirement funding. Of course it must be real retirement finding because they will need the tax certificate at the time of the return
Insist on proof again.
This makes a huge difference but you have to give up cash to save the tax...
I am guessing you are young and dont want to do that

3. All the other 'tricks' sail close or over the line.

4. If you own the business (or are a director... don't screw with SARS on PAYE...
- If they catch one they may look at everyone
- SARS are going to get their money, penalties and interest.. and they will get it from whomever is easiest, closest and has money.
If the staff member has moved on they will come after you
- If they believe it is deliberate fudging then they get tougher...

Remember the US Tax service took down Capone...and he could afford lawyers.
You will be easy meat...
 
SpartanX said:
Hi Guys

Whats the best way to keep PAYE low for employees (and my self)?

I started deducting PAYE last month, and everyone is complaining (my self included). It really does feel way too much.
I've noticed it's worse with overtime.
I'm using FNB's payroll system and does the calculations. I also noticed if I split the basic salary, and put a certain amount under "taxable allowance", the tax becomes just a bit low. There's also "no taxable allowance", not sure if I wont get in trouble if I use that for "no reason".

Thanks for any help!
Click to expand...

So how long have you not been deducting PAYE? PAYE isn't something new out the box so how long have you been screwing SARS?
Unless I have missed something you are basically complaining about having to pay income tax just like every other working person is SA?
 
^^vampire^^ said:
So how long have you not been deducting PAYE? PAYE isn't something new out the box so how long have you been screwing SARS?
Unless I have missed something you are basically complaining about having to pay income tax just like every other working person is SA?
Click to expand...

What I was wondering too. How long was the business running without paying PAYE tax?
 
With all due respect, you should not be paying people if you have no idea how PAYE works and you are asking these types of questions on a forum.

My advice is, get a reputable provider or accountant to outsource your payroll processing to, they will process it correctly. Unfortunately some accountants think they are experts in payroll because they know about PAYE - but in fact they are not. There are other components that are also important on payroll - which has nothing to do with tax. I would rather lean towards a specialist payroll service.

Using a payroll program also doesn't safeguard you in any way because (as it appears you have already done) you can use transactions that has the desired effect on your screen but are completely inappropriate to use. You need someone that actually know what those transaction mean, what the effects are and when you are allowed to use them.

There are unfortunately only a few legal ways to "keep PAYE low" which you can only use in very valid situations with all the legal supporting documents. You are heading for big trouble if you try to dodge taxes. The days of "keeping PAYE low" with loopholes have long gone for most of us. It's easy to jippo systems and declarations, but it will eventually catch up to you and then you will be in a world of hurt.

You need to pay your pound of flesh - end of story and get someone to help you do it correctly to stay out of trouble.
 
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