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  1. #21
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    Default Re: Tax on Overtime worked

    Quote Originally Posted by Veneficus View Post
    even though it is done that way it should still not have the effect to take you into a 44% bracket

    The percentage taken might be slightly higher since it assumes that you will be getting that each month
    But it should not propel you into a ridiculous tax bracket
    The problem is simple.
    Her PAYE on her normal salary was say 25%
    Her PAYE on the combined amount (salary + overtime) was say 35%

    The PAYE on her salary was already deducted (prior to the overtime being processed), so to get the 35% right, they had to subtract an amount from the overtime, which ended up as 44% of her overtime.

    The question to answer is what was the % tax on the combined amount?
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  3. #22
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    Default Re: Tax on Overtime worked

    Quote Originally Posted by 4eTouareg View Post
    The problem is simple.
    Her PAYE on her normal salary was say 25%
    Her PAYE on the combined amount (salary + overtime) was say 35%

    The PAYE on her salary was already deducted (prior to the overtime being processed), so to get the 35% right, they had to subtract an amount from the overtime, which ended up as 44% of her overtime.

    The question to answer is what was the % tax on the combined amount?
    Incorrect, she earns R11k per month.

    PAYE on that amount is 807-75 (7.3%) and UIF R110-00. It is impossible for her to jump to the 44% tax bracket (earnings of 1.5m per year) by earning an extra thousand rand in overtime for a month.

    If she earned R12,100 for that month then her PAYE deduction would have been R1,005-75 and UIF R121-00 at worst.

    She should have got about R850 extra and not R500.
    Last edited by RobH; 2018/05/17 at 11:32 AM.

  4. #23
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    Default Re: Tax on Overtime worked

    Quote Originally Posted by 4eTouareg View Post
    The problem is simple.
    Her PAYE on her normal salary was say 25%
    Her PAYE on the combined amount (salary + overtime) was say 35%

    The PAYE on her salary was already deducted (prior to the overtime being processed), so to get the 35% right, they had to subtract an amount from the overtime, which ended up as 44% of her overtime.

    The question to answer is what was the % tax on the combined amount?
    To quote Rustie if I may...

    overtime is added to your gross for the year and is taxed according to a table
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  5. #24
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    Default Re: Tax on Overtime worked

    Quote Originally Posted by hunter26 View Post
    To quote Rustie if I may...

    overtime is added to your gross for the year and is taxed according to a table
    In my world I work out 40% ie for every R1.00,R00.40 gets deducted
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  6. #25
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    Default Re: Tax on Overtime worked

    Over time is added to normal salary, annualised and PAYE calculated on that.
    On the amounts mentioned the tax bracket will be comfortably in 18%.

    PAYE on normal salary should be R807,75.
    If overtime was included, it would have been R999,32.
    Tax on the overtime should have been R191.57.
    UIF should be 10.64

    Yes, the PAYE is excessive, but as long as the amount deducted is declared on the IRP5,
    the excessive amount can be claimed back when submitting the tax return. As long as the
    excessive amount is declared.

    I must be honest, I realise that R358.32 is a lot of money for some, but as long as the PAYE is declared,
    I really think it's not worth the effort fighting for it if you will be getting it back from SARS later in anycase.
    Is it right? No.
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  8. #26
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    Default Re: Tax on Overtime worked

    Quote Originally Posted by 4eTouareg View Post
    The problem is simple.
    Her PAYE on her normal salary was say 25%
    Her PAYE on the combined amount (salary + overtime) was say 35%

    The PAYE on her salary was already deducted (prior to the overtime being processed), so to get the 35% right, they had to subtract an amount from the overtime, which ended up as 44% of her overtime.

    The question to answer is what was the % tax on the combined amount?
    Nope
    According to all the info your salary tax is not a set amount
    Everything you earn below a certain level only pays that percentage tax only
    The higher percentage only applies to the section that exceeds that amount not to the amount below.

    So no matter what if you base salary amount is 25% tax
    And you then do overtime that pushes you into the next tax level of 35%

    Then only the amount that went over into the next tax level will have to pay 35% tax
    Last edited by Veneficus; 2018/05/21 at 02:05 PM.
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  9. #27
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    Default Re: Tax on Overtime worked

    Quote Originally Posted by Veneficus View Post
    Nope
    According to all the info your salary tax is not a set amount
    Everything you earn below a certain level only pays that percentage tax only
    The higher percentage only applies to the section that exceeds that amount not to the amount below.
    That higher % is called marginal tax. This kind of discussions are constant. At the end of the year everything balances. Knowing average spending habits here better to pay over than under. Recently tax man paid good interest to me on over payment of tax. Now my company is sitting over R40 k tax credit. SARS has not paid it out. When it comes it will come with interest.

    I have not studied in detail our tax tables to see if the same can happen as to my cousin's husband. He got an increase and at the end he got EUR100 less per month because of steep progressive tax.
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  10. #28
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    Default Re: Tax on Overtime worked

    Quote Originally Posted by Brand View Post
    Hi. Is there any set percentage for tax on overtime? My wife worked overtime last month which her company initially didn't pay her for. After some hassles, they paid her yesterday but deducted 44% tax and an additional 4% for UIF.

    The overtime amount gross was R1064.25 but she only got out R503.72. That is a bit excessive, I think?

    ps. She earns just over R11 before tax.

    Brand,

    You mentioned she receives just over R11k before tax. Let's give the employer's calculation the benefit of doubt and say she earns R12k per month. That is R144k per year, or with the overtime added it will be 145,064.25.
    At the current (2019) tax rates this falls (before and after the overtime) in the 18% bracket (which is for earnings up to 195,850 per year) She should therefore only be taxed 18% on the overtime.
    The UIF deduction from employees is 1% (up to a maximum of R148.72 per month)

    Her additional income for overtime should therefore be:
    Overtime 1,064.25
    PAYE (191.57)
    UIF (10.64)
    NET 862.04

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  12. #29
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    Default Re: Tax on Overtime worked

    Quote Originally Posted by Jouko View Post
    That higher % is called marginal tax. This kind of discussions are constant. At the end of the year everything balances. Knowing average spending habits here better to pay over than under. Recently tax man paid good interest to me on over payment of tax. Now my company is sitting over R40 k tax credit. SARS has not paid it out. When it comes it will come with interest.

    I have not studied in detail our tax tables to see if the same can happen as to my cousin's husband. He got an increase and at the end he got EUR100 less per month because of steep progressive tax.
    I am not sure but I think that could have happened years ago.

    As I understand it that is not possible with current layout at all since the higher tax levels does not apply to the money you earn falling below the higher bracket

    Thanks for the confirmation BvN
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  13. #30
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    Default Re: Tax on Overtime worked

    Well, it is not that difficult.

    Tax is calculated on a sliding scale like many other things.

    The principle is always the same: For the first portion, you pay a lump sum, and then a much higher percentage for the balance after that.

    This is then precisely the reason why people think they are taxed differently on things like overtime for example. It has nothing to do with that. All that matters is the balance after the base amount and what it was for, is not important.

    In the end however, the bottom line is all that matters. What was your total income, what was your total tax and you calculate the percentage tax on the total amount.


    That is my understanding. And anyone is welcome to correct me if I am talking bollocks.
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  14. #31
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    Default Re: Tax on Overtime worked

    Quote Originally Posted by biltong View Post



    That is my understanding. And anyone is welcome to correct me if I am talking bollocks.
    To correct you. If your name starts with Z you are excluded from paying tax.
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  15. #32
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    Default Re: Tax on Overtime worked

    Taxable income in ZAR Tax rate in ZAR
    0 - 195 850 18% of taxable income
    195 851 - 305 850 35 253 + 26% of taxable income above 195 850
    305 851 - 423 300 63 853 + 31% of taxable income above 305 850
    423 301 - 555 600 100 263 + 36% of of taxable income above 423 300
    555 601 - 708 310 147 891 + 39% of of taxable income above 555 600
    708 311 - 1 500 000
    207 448 + 41% of taxable income above 708 310
    1 500 001 and above 532 041 + 45% of taxable income above 1 500 000


    This is the official rates
    This does not change so if you earn over a certain amount the amount lower than that's tax does not increase
    And you are welcome to do the calculations you will see the set amounts does not exceed the previous sections %

    Yes obviously if you earn over a certain amount then the overall tax % will be slightly higher
    But not to the full level anyway and that is not how it should be calculated
    Except if you want to be able to state "I pay 33.25% tax on my salary"

    Now look closely to just get into the 41% section your annual salary have to be over R708,311.00

    So whomever did her tax deducting 42% was making a big mistake

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    Last edited by Veneficus; 2018/05/22 at 07:03 AM.
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