Tax - does this make any sense?

[Picard]

For the sake of easy explanantion I'm going to use simple numbers.

I normally get paid "R1000" and I pay tax of R100. But this month is our bonus month and we get double our monthly pay (I don't get much to start with so it isn't much to get excited about). However all of a sudden my tax deduction isn't R200 but R230.

Obviously there are different taxes for different income brackets. But isn't that normally spread evenly over whole year?

I'm not that clued up on the intricacies of personal finances.

 

[Y'all Qaeda]

Nope. For that month, you have been bumped up a bracket, and have to pay accordingly. Not sure if you can claim it back.

 

[xrapidx]

Yip - new tax bracket

Try being a contractor - happens monthly.

Btw - if its standard that you get a standard cheque as double - they could have spread it out over the year, not that it makes much of a difference. In fact, if you plan for it, its better to do it the way they did, because you could use the extra money each month for other things.

 

[undesign]

Every additional Rand you earn is taxed at your marginal tax rate. You can look the percentage up in the tax tables.

I know, it sucks.

 

[gregmcc]

You've just made the tax money even happier.

 

[Celine]

bonus payments are calculated a bit differently.

this is how you get the tax on the bonus:

find the annual income on the monthly salary - find the tax on the annual salary.
add the bonus to the annual income - find tax on the annual salary including the bonus.
minus the one from the other and that is the tax on the bonus.

 

[undesign]

i.e. your bonus x marginal tax rate

 

[fdaniels]

bonus payments are calculated a bit differently.

this is how you get the tax on the bonus:

find the annual income on the monthly salary - find the tax on the annual salary.
add the bonus to the annual income - find tax on the annual salary including the bonus.
minus the one from the other and that is the tax on the bonus.

Well, the way I got taxed when I got my bonus was [income + bonus] * 12 to get the supposed annual income. Take the anual tax for that bracket and divide by 12. i.e. You get tax A LOT more for that month. At least you get some of it back when you do your tax returns.