IT'S BONUS TIMEBUT OH, THE TAX!
Personal Finance|December 2022
HOW DID the Grinch steal Christmas? In the beloved children's story written in 1957 by Theodor Geisel, better known as "Dr Seuss", we are introduced to this grouchy, solitary creature, the Grinch, who tries to cancel Christmas by stealing Christmas gifts and decorations from the homes of the nearby town of Whoville on Christmas Eve.
IT'S BONUS TIMEBUT OH, THE TAX!

In the book, the Grinch realises that Christmas is not all about money or presents. Unfortunately, for the Grinches that work for the South African Revenue Service (SARS), it seems that Christmas is all about tax-especially when it comes to your hard-earned annual bonus!

Now to be fair, most people accept (albeit rather grudgingly) that since an annual bonus is part of one's income, one can expect their bonus to be taxed.

However, despite me writing a similar article on this subject every year, people are still shocked by just how much tax gets clawed out of their 13th cheque.

The misconception

Using the example of an employee earning a base salary of R480 000 per annum, if one applies the 2022/23 tax tables (see alongside), this amount falls within the 31% tax band. The annual tax liability (before rebates) is R113 065 (R73 726 +31% of R126 900).

To keep the calculations of this example, purposes simple for the we are assuming that such employee is under the age of 65, has no medical expenses, and is not a member of any retirement fund.

The primary rebate thus reduces their annual tax liability to R96 640 (R113 065 - R16 425).

The payroll department will then divide both the base salary and the tax liability by 12, meaning that the monthly salary is R40 000 (R480 000/12) and the monthly PAYE to be deducted and paid over to SARS is R8 053.33 (R96 640 / 12). Their monthly take-home pay is thus R31 946.67 (R40 000 - R8 053.33).

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Denne historien er fra December 2022-utgaven av Personal Finance.

Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.

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