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And now for the video script... :)

PAYE is the acronym for Pay as You Earn which is the tax paid to SARS by all employees who earn more than R6918 pm – for the current 2020 financial year. If you earn less than R6918 pm you do not pay PAYE but you are still required to be registered.

On 1 March of each year SARS publishes the updated tax tables and salary bands with adjusted tax rate for each salary band. Your payable tax depends on how much you earn, your age and your pay period – weekly or monthly. For example, there are different tax rates for those under the age of 65, between 65 and 74 and over 75.

In this example we will use the 2020 tax tables for individuals earning a monthly salary. As you can see the starting salary band for PAYE contributions for people under the age of 65 earning a monthly salary is between R6918 and R6968 and the amount of PAYE due is only R3. This is equal to 0.043% of your salary. This may sound like nothing but PAYE is based on a sliding scale so the more you earn, the more you pay. The percentage of PAYE goes all the way up to 45% of your salary which makes South Africa the second highest personal income tax paying country in Africa, just after the Ivory Coast and the 20th highest tax paying country in the world for individuals.

From a SARS perspective, PAYE is the single biggest tax contributor to the government coffers making up 38% of all taxes.

So, when should you register for PAYE?
An employer must register within 21 days of becoming an employer. The employer is also required to register for UIF at the same time as PAYE. Since the requirements and information are identical for UIF and PAYE, we have combined them into one application. Your PAYE and UIF contributions are paid to SARS by your employer after they have been deducted from your salary. The exact amounts should be itemised on your payslip.

So, what documents and information do you need to register for PAYE? SARS requires the company name, registration number, income tax number and business description for both PAYE and UIF registrations. You will also need to estimate the total value of your payroll for the next 12 months as well as the estimated number of employees the payroll will be based on. As always SARS will require a letter from your bank confirming the companies banking details. All of this information can be scanned and email to us.

So, what is UIF?
UIF is the acronym for the Unemployment Insurance Fund. The contributions for this fund is collected by SARS but managed by the department of Labour. It is intended to give short-term relief to workers who become unemployed or who are unable to work because of maternity, child adoption or illness. It also provides relief to the dependants of a deceased contributor.

So, how much are the contributions? The total UIF contribution to SARS is 2% of the employee’s salary. However, this amount is shared equally between the employer and employee who each pay 1%. This means that only a 1% deduction will be seen on the employee’s payslip. There is a salary ceiling of R14872 pm which means that the maximum UIF contribution per month per employee is capped at R148.72

It is the employers responsibility to pay the 2% UIF contributions over to SARS within seven days after the end of the month. If the last day for payment falls on a public holiday or weekend, the payment must be made on the last business day before the public holiday or weekend or SARS will automatically add a 10% penalty.

Finally, if you are a government employee or work for less than 24 hours a month you are excluded from contributing to UIF.

My top tip is for you to ensure that all the directors as well as the company’s tax returns are up to date to ensure that SARS processes the application instantaneously.

I hope this video has been helpful so as always remember, WE ARE HERE TO HELP

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