Salary and Commission tax question

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Patty

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So... I earn a basic salary and commission, and have a tax directive. The commission i get charged tax as per directive. In order to determine the tax segment on my basic salary.... Do I enter the tax table at the basic salary amount only or do I enter the tax table at basic + commission amount?
 
where is the tax directive from?

Your PAYE is calculated on how much you've earned for the year.. not on what some piece of paper says.
 
Basic + commission as far as I can make sense of the OP...
 
You pay tax on your total earnings. So add the two and apply the directive to it. This will mean that your monthly tax will vary according to the amount of commission you get. No need to use the tax tables. This is AFAIK.
If directive says 20% then it is 20% of basic and 20% of commission. Whether you calculate it separately or together it amounts to the same (distributive law of multiplication: x(a + b) = xa + xb)
At the end of the tax year SARS does not care how you earned the money they will just calculate your tax on what you earned. This means that it is highly unlikely that your taxes will balance at the end of the tax year.
 
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Yes, you don't get a directive for a portion of your taxable income only. It applies to your total income afaik. Who uses tax directives in this day and age though? They can be nasty beasts if you're not careful...
 
the tax directive is ONLY for the commission income. if i were you i would check very very carefully that your commission is indeed more than your basic salary because this could end up you paying in on your assessment.

the basic salary is still taxed as per the tax tables.
 
Celine said:
the tax directive is ONLY for the commission income. if i were you i would check very very carefully that your commission is indeed more than your basic salary because this could end up you paying in on your assessment.

the basic salary is still taxed as per the tax tables.
Click to expand...

Really? One can get a tax directive for a portion of one's taxable income? Interesting...
 
So what is a tax directive exactly?

Is it just another way to calculate your monthly prepayments to SARS?
 
It's an instruction to a business to deduct a fixed percentage from the individual's remuneration (any monies paid to him/her for services rendered) for tax purposes. The individual must be issued with an IRP5 tax certifiacte at the end of the tax year.
 
Celine said:
the tax directive is ONLY for the commission income. if i were you i would check very very carefully that your commission is indeed more than your basic salary because this could end up you paying in on your assessment.

the basic salary is still taxed as per the tax tables.
Click to expand...
I think not.
Lets say I work for 3 different businesses. I get a directive and give it to all three who apply it to my remuneration. It overrides the tax tables. If not then I can earn 5k at each and pay no tax, cos 5k pm is under the min income for tax.
At the end of the tax year SARS can then demand a year's tax from me. I could of course in the meantime take the tax and invest it in my bond.
A directive is basically for people who will have other deductions, like home office, travel claim etc. and they cannot factor that in with where-ever they get their pay from.
 
LPCPT said:
It's an instruction to a business to deduct a fixed percentage from the individual's remuneration (any monies paid to him/her for services rendered) for tax purposes. The individual must be issued with an IRP5 tax certifiacte at the end of the tax year.
Click to expand...

I can also Google believe it or not.

I just wanted a practical example of how exactly it works.
 
KalMaverick said:
I can also Google believe it or not.

I just wanted a practical example of how exactly it works.
Click to expand...

Put very simply, if you cannot forecast your income and expenditure then you will need to make an educated guess - especially if the figures fluctuate considerably. You can apply for a tax directive for a fixed percentage to be deducted each month - a percentage that will be a more realistic figure over the course of a tax year than the PAYE tax tables. So if your total tax deductible amount is R50k one month and R12k the next, using the tax tables you will not be fairly taxed in either month. However if you'd applied for a 35% tax directive you'd be taxed far more "fairly"...
 
LPCPT said:
I think not.
Lets say I work for 3 different businesses. I get a directive and give it to all three who apply it to my remuneration. It overrides the tax tables. If not then I can earn 5k at each and pay no tax, cos 5k pm is under the min income for tax.
At the end of the tax year SARS can then demand a year's tax from me. I could of course in the meantime take the tax and invest it in my bond.
A directive is basically for people who will have other deductions, like home office, travel claim etc. and they cannot factor that in with where-ever they get their pay from.
Click to expand...

i have no clue where you get your information from. a tax directive is issued to only ONE company at a time NOT 1 directive for 3 different companies as you are claiming in your post.

in the OP's post she is applying for a commission directive, SARS issued the directive based on her information she provided and only issued the directive to her employer for the commission part of her income.

in other instances where a directive is issued is that where someone has a 2nd income and no tax is being deducted but needs tax to be deducted from the 2nd income. the person will then request a directive instructing the payroll division to deduct the PAYE in order that they do not pay in on their assessment.

SARS never issues one directive that can be used for 3 different employers.
 
I guess the simple answer to the OP is that the basic salary will not (for example) be tax exempt if it falls under the threshold, just because you've chosen a higher commission package. This is my understanding at least. I might be very wrong, as it seems I was earlier as one can have a directive issued for only certain portions of one's income. Apparently. I'm still not 100% convinced about this...
 
DJ... said:
Put very simply, if you cannot forecast your income and expenditure then you will need to make an educated guess - especially if the figures fluctuate considerably. You can apply for a tax directive for a fixed percentage to be deducted each month - a percentage that will be a more realistic figure over the course of a tax year than the PAYE tax tables. So if your total tax deductible amount is R50k one month and R12k the next, using the tax tables you will not be fairly taxed in either month. However if you'd applied for a 35% tax directive you'd be taxed far more "fairly"...
Click to expand...

So it's basically just a different amount that gets paid to SARS each month?

Besides that everything else works the same?
 
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