Employee Tax

Employee Tax

Employee Tax

There are 4 different types of employment taxes:

PAYE (Pay as you earn) is a tax that must be deducted from an employee’s salary if the salary is over the PAYE threshold.

UIF should always be deducted from any employee and the employer contribute the same amount to UIF, regardless of the salary/wage amount paid and regardless if an employee is temporary or permanently employed.

SDL is yet another employment tax for which an employer must register if the total payroll tax exceeds R500k in any 12 consecutive months.

WCA is workmens’ compensation due annually to the Labour department based on the risk of injury for your specific business, number of employees and salaries paid

Any employer, whether it is a sole proprietor, company, CC or Trust, that pay any employee a monthly salary over the PAYE threshold (approx. R7 200 but change every year with the new budget), must register for PAYE.

This is mandatory and requires a specific application process.

Registration is done on Efiling and is most of the time a quick process.

Our cost for registration is R750.00

If you have employees who all earn less than the PAYE threshold and you are not liable for SDL, then the monthly payments can be made to the Labour department.

However, if PAYE and/or SDL are applicable, then all payments must be made to SARS

Due date for submission is on or before the 7th of the following month.

Note that SARS only count Monday to Friday as working days and deadline dates always move forward, meaning if the 7th is on a Sunday, then Friday, the 5th will be due date.

Apart from the monthly submissions of the EMP201 to SARS and/or to UIF, employers are also required to submit bi-annual EMP501 reconciliations to SARS for those who are submitting EMP201’s

These submissions are normally due around April and October every year and is also subject to penalties from 10% for late submissions to 200% for tax evasion.

Important notes:

Employment tax is not a money-making scheme – what the employer deducts off salaries need to be paid to the Government institutions. The employer acts as an agent with strict deadlines.

However, with South Africa’s high unemployment rate, specifically for young people, SARS does offer an Employment Tax Incentive, which puts money back in the pockets of employers for employing young people.

Please note that it is illegal to employ illegal foreigners, and employers will be subject to fines and/or imprisonment.

South Africa is also governed by a minimum wage system. Refer to the Labour website for more information.

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A Micro Business is classified as a company with a gross income* not exceeding R1 million.





A Small Business is classified as a company with a gross income* not exceeding R14 million.





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