13th salary tax

J

jacodebeer

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Hello,

What is the normal tax deductions by law regarding 13th checks, what pecentage does the taxman take?
 
There is no special mechanism (in tax law) for 13th cheques: the 13th cheque is added to your earnings for the year and the tax calculated accordingly.
 
rrh said:
There is no special mechanism (in tax law) for 13th cheques: the 13th cheque is added to your earnings for the year and the tax calculated accordingly.
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Correct. I figured this out myself and by reading up online.
The amount is declared separately as a source code on the IRP5 but the amounts add up to the exact same value. Technically you're paid 13 times a year, and whatever that amount equates to, use the tax table and you get your answer.
 
rrh said:
There is no special mechanism (in tax law) for 13th cheques: the 13th cheque is added to your earnings for the year and the tax calculated accordingly.
Click to expand...

Are you not charged tax on that salary month as if you earn that amount every month? For instance I earn 10k, my bonus is 10k so for December I get taxed as if my salary was 240K pa and not 130K pa? This error is then claimed back during your tax returns.

As a rule of thumb I work out what percentage of my total salary my bonus is, I multiply my usual after deductions salary by that percentage and that's usually pretty close to what I get out.
 
GreyBush said:
Are you not charged tax on that salary month as if you earn that amount every month? For instance I earn 10k, my bonus is 10k so for December I get taxed as if my salary was 240K pa and not 130K pa?

As a rule of thumb I work out what percentage of my total salary my bonus is, I multiply my usual after deductions salary by that percentage and that's usually pretty close to what I get out.
Click to expand...

Nope, doesn't work like that.
 
For someone earning R10k a month... and gets 10K bonus...

Total Tax R 2 646.67
PAYE R 2 646.67
Tax on basic R 846.67
Tax on bonus R 1 800.00
[/B]Take-home pay R 17 353.33
 
Yep, 13th cheque is basically deferred money from your other 12 cheques. A Bonus on the other hand is different as I understand it. Normally they tax my bonus at a far higher rate than the rest of my salary.
 
You are liable for tax based on what you earned for the year. Including a bonus. PAYE is an estimate based on what your earnings for the year will come to. Monthly PAYE is usually calculated without taking into account a bonus, especially of you aren't guaranteed to get a bonus each year.

The amount of tax that comes off your bonus must be sufficient to ensure that at the end of the tax year you have paid the tax due based on the total earnings. If your bonus bumps you into a higher tax bracket for the year than what your PAYE has been based then, well, that can be sh***ty.

Otherwise you have to pay in later on.
 
Tander said:
For someone earning R10k a month... and gets 10K bonus...



Total TaxR 2 646.67

PAYER 2 646.67

Tax on basicR 846.67

Tax on bonusR 1 800.00

[/B]Take-home payR 17 353.33
Click to expand...




your calculations are wrong. On mobile so cant go into detail.

Basically if HR is is using a decent payroll program, it should average out the PAYE based on annual total salary including the 13th cheque.
 
signates said:
your calculations are wrong. On mobile so cant go into detail.

Basically if HR is is using a decent payroll program, it should average out the PAYE based on annual total salary including the 13th cheque.
Click to expand...

Not my calculations. That's from the website. I've always used that site and it has alway been accurate down to the last 50 bucks.
 
Simple exaplanation

If you earned R10k a month and R10k 13th cheque.

The calc would be as follows:

R120 000 (annual)
R21 600 (Total tax for the year at 18%)

With 13th

R130 000 (Annual)
R23 400 (Total tax at 18%)

Tax to be paid = R23 400 - R21 600 = R1 800 Which you guessed it, is the same as every month.

Now the reason you think that you are taxed more is that you won't actually pay R1 800 every month on your normal salary as it will be your R10k - medical - pension - whatever else you get as a deduction. But with your 13th cheque you won't get those deductions it will just be the R10k @ 18% or whatever tax bracket you are in :)
 
Tander said:
Not my calculations. That's from the website. I've always used that site and it has alway been accurate down to the last 50 bucks.
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My mistake. Was doing the calcs in my head and it just seemed higher than what i worked out. Your figures are correct. Punched them into Pastel Payroll and confirmed you result.
 
signates said:
My mistake. Was doing the calcs in my head and it just seemed higher than what i worked out. Your figures are correct. Punched them into Pastel Payroll and confirmed you result.
Click to expand...

Thanks for confirming.
 
Most companies will use the monthly PAYE figure, so yes one month you will pay much more tax than you really should, but then the last paycheck of the tax year will probably have a lower tax figure as the PAYE is then calculated for the whole year.
 
ToxicBunny said:
Most companies will use the monthly PAYE figure, so yes one month you will pay much more tax than you really should, but then the last paycheck of the tax year will probably have a lower tax figure as the PAYE is then calculated for the whole year.
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This is how the apps calculate it. (VIP Payroll does). The result is usually very correct i.e. you get a few bucks back from SARS every year.
 
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