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Employment Types and how to tax (1/3/2013)

Trying to determine how the CLIENT must tax a PERSON who provides WORK, to comply with SARS's requirements can be a dauting task.
The table below attempts to give practical guidelines to determine in what type of employment a PERSON falls, and how the CLIENT must deduct tax (PAYE and UIF) on payment of such WORK.

Most employed PERSONS will fall under STANDARD EMPLOYMENT. A PERSON must however be taxed according to the other types if the conditions apply.

EMPLOYMENT TYPES
Applicable Conditions
PAYE deducted
by the CLIENT
UIF deducted
by the CLIENT
STANDARD EMPLOYMENT
Payment to PERSON, for WORK provided regularly for more than 22 hrs per week
Yes, Per Inc.Tax Tables Yes
NON-STANDARD EMPLOYMENT
Payment to PERSON, for WORK provided irregularly for less than 22 hrs/week, and PERSON cannot prove that he/she has only one job.
OR
PERSON is employed part-time at rate that if employed full-time would be liable for PAYE
Yes, at 25% Yes
PERSONAL SERVICE PROVIDER
Payment to INTERMEDIATE which is a Company, CC or Trust, for WORK provided
AND
WORK is rendered personally by a 'Connected Person' of the Company, CC or Trust
AND
WORK is performed mainly at the premises of, and subject to the control and supervison of the CLIENT.
Yes
Company or CC: 28%
Trust: 40%
Yes
(Exempted) LABOUR BROKER
Payment to INTERMEDIATE which is a Natural Person, for WORK provided
AND
Such INTERMEDIATE has submitted Exemption Certificate IRP30 for current year
No No
INDEPENDENT CONTRACTOR
Payment to PERSON or an INTERMEDIATE which is a Natural Person, for WORK provided
AND
WORK was NOT performed mainly at the premises of, NOR subject to the control and supervison of the CLIENT.
No No
DIRECTIVE ISSUED
Where SARS has issued an instruction on how to tax the PERSON or INTERMEDIATE
Per Directive Per Employment Type

DEFINITIONS
-WORK: Labour or Service
-PERSON: Natural Person that does the WORK
-CLIENT: Party that utilizes the PERSON's WORK
-INTERMEDIATE: Party through which the PERSON is provided to the CLIENT
-'Connected Person': Essentially a Relative of a Natural Person, a Beneficiary (or Relative) to a Trust, another Member (or Relative) to a Member of a Partnership, or various parties in relation to a Company. For details see the Income Tax Act (58 of 1962), Preliminary, 1) Interpretation.

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Pierre Leon Myburgh