EXCEPT if it has anything to do with TAX!

Today I am referring to Individual Tax – Your payslip and eventually your IRP5.

I would bet that very few employees/employers check their payslips thoroughly…

The typical items to check on your payslip (the list is long, but I am only referring to a few):

• Basic Information:
  • Full Names
  • ID Number
  • Address
  • Bank Account Details
  • Income Tax Number
• Basic Salary
  • This will normally be the fixed, agreed upon gross salary you receive each month.
• Medical Aid
  SARS gives a Medical Tax Credit if you contribute to a Medical Aid, but the following is very important:

   

  • You must be the Main Member on the Medical Aid
  • It must be a registered Medical Aid (not Medical Insurance)
  • The number of dependents (including the main member) is the key player here – this is the number upon which the credit is calculated. It is important to inform the Payroll Administrators if there were any dependents added/terminated on your medical aid.
• Retirement Annuity Fund (RAF)/Pension fund
  • Limited to 27.5% of your Total Annual Taxable Income
  • The amount of RAF on the payslip MUST correlate to RAF deducted from the bank account (Confirm the RAF amount with your financial advisor – the amount on bank account sometimes includes other items such as life cover, etc). Only the RAF amount can be deducted for Tax purposes.
  • It is important to inform the Payroll Administrators:
    • if there are any payment holidays taken on the RAF payments
    • if the RAF payments were cancelled
    • if the RAF payments were decreased/increased.

• Travel Allowance (Fixed)
  This is a fixed amount received for the travel expenses incurred while using a private motor vehicle for business purposes. Depending on the amount of kilometres used for business purposes, you can be taxed on 20% (more business km’s than private) or 80% (more private km’s than business) of the Travel Allowance. It is important to keep a logbook of your km’s travelled. You can then claim a deduction on assessment of your annual income tax return. SARS gives you guidance on how to keep record and provides a Travel eLogbook template.

• Fringe Benefits
  There are different types of fringe benefits that attracts different tax calculations. Ensure that you understand the type/SARS code and amount of Fringe Benefits specified on your payslip and contact your Payroll Administrator should you have any questions.

• Reimbursements
  These are Non-Taxable amounts refunded to you for company expenses incurred.

• Leave (Annual, Sick, Family Responsibility, Study)
  It is always important to check your Leave Balances. Only you and your line manager would know if the balances are incorrect. The Payroll Administrator compiles hundreds of payslips each month. If they did not receive a leave application through the necessary channels, the balance will be incorrect. Therefore it is of the utmost importance for each company to have a structured leave process and leave policy in place – especially referring to Annual Leave. If you are to resign, these leave days are payable to you.

• Unemployment Insurance Fund (UIF)
  This is a compulsory contribution. The employer must pay a total contribution of 2% (1% contributed by the employee and 1% contributed by the employer) within the prescribed period. The maximum contribution is R 177.12 at time of writing.

• PAYE (Pay-As-You-Earn)
  This is the Tax calculated on the Gross Remuneration including fringe benefits and taxable deductions. The PAYE will be calculated according to the SARS Tax Tables where the monthly Taxable Income is annualised, taxed and recalculated to a monthly value.

What most people don’t realize is, whether done by yourself or a Tax Practitioner, the onus for your personal tax will always be on YOU. Please, check your payslips to prevent any Surprises!

YOUR tax, YOUR responsibility

References:

1. Why Humans Need Surprise | Greater Good (berkeley.edu)