Over the last couple of weeks I have received a number of letters and e-mail which have made me realise that there are some areas of everyday tax that need clarity.
The question of why a wife's tax is higher than her husband's, and whether she is taxed at a higher rate was raised, as well as whether your personal tax is affected by the number of children you have.
For a number of years now, every individual, whether single or married, male or female, earning taxable income has been taxed using the same tax table. If you pay more tax than your spouse, it will be because you earn more than him or her. In addition, whether you have children or not, and how many children you have, does not affect your tax.
If you earn a remuneration (salary or wages) and it is less than R60 000 a year, it will be subject to the employees' tax categorised as SITE.
Your employer will be responsible for ensuring that the tax has been correctly deducted and, as long as you do not earn any other non-SITE-able income, you will not need to put in a tax return to the Receiver of Revenue.
If you feel unhappy about the correctness of the amount of tax you are paying in this situation, you may ask your employer to show you how it is calculated.
If you are required to submit a tax return, the SA Revenue Service (SARS) will calculate the amount of tax that you should have paid and rectify any error that may have been made by requesting an additional payment or making a refund.
You will be required to submit a tax return if your IRP 5 certificate reflects tax as PAYE in addition to SITE, or if you earn any non-remuneration income.
It may be that you earn trading income, or investment income in the form of interest (dividends are tax free) greater than R1 000, in which case not only will you be required to put in a tax return, but you will also be required to register as a provisional taxpayer.
This means that even though you may be earning remuneration which is subject to SITE and perhaps PAYE, you will be required to submit a form in August (first payment), and February (second payment) and perhaps the following September (top up payment if necessary) for each tax year.
This form (the IRP6) is the mechanism whereby you can pay the balance of your tax (on trading or investment income) to SARS.
To correct an error which I commonly come across, if you are a provisional taxpayer it does not mean that you do not have to have PAYE and/or SITE deducted from your remuneration. It is only income received by a director of a company, and income paid by that company to that director, that is not subject to PAYE and/or SITE deductions.
Provisional tax may be based on the "basic amount", that is the income reflected on your last assessment, for the first two payments. If your income for the current year will be less than the income reflected on your last assessment, then you may pay on a lower amount. But it is important that you calculate the amount accurately for the second payment, because if the actual tax paid by February 28 is less than 90 percent of what it should have been, you will be charged a penalty of 20 percent of the difference.
If you are concerned about the amount or mechanism of tax collection, contact either the SARS or a tax consultant to check that you are paying the right amount in the right way.