South Africa | Site secured by Comodo Security. endstream endobj 46 0 obj<> endobj 47 0 obj<> endobj 48 0 obj<>/ColorSpace<>/Font<>/ProcSet[/PDF/Text/ImageC/ImageI]/ExtGState<>>> endobj 49 0 obj<> endobj 50 0 obj[/ICCBased 55 0 R] endobj 51 0 obj[/Indexed 50 0 R 255 56 0 R] endobj 52 0 obj<> endobj 53 0 obj<> endobj 54 0 obj<>stream However, some companies allow employees to pay additional tax during normal months, and then the bonus / 13th cheque is seen to be tax free. How do I calculate PAYE on a 13th cheque This entry was posted in Tax Q&A and tagged Salary / IRP5. EasyBiz Technology Tax Calculator skip to Main Content EasyBiz Technologies is the authorised Intuit QuickBooks local partner in South Africa Mail an expert: info@easybiztech.co.za Speak to an expert : +27 (010) 203 4300 QuickBooks Online User Login South Africa Blue Sky Publications (Pty) Ltd T/A TheSouthAfrican Number: 2005/028472/07. Ncube also said they were still negotiating with the National Joint Negotiating Council (NJNC) to [] Some of your relatives and loved ones may be getting on in years and may not be as careful with their finances and cards as they were before. i.e. Posted 7 January 2014 under Tax Q&A How do I calculate PAYE on a 13th cheque This entry was posted in Tax Q&A and tagged Salary / IRP5. A 13th cheque is a bonus that the employee can expect with certainty if this is part of his or her employment contract, Porter said. EasyBiz Technology Tax Calculator skip to Main Content EasyBiz Technologies is the authorised Intuit QuickBooks local partner in South Africa Mail an expert: info@easybiztech.co.za Speak to an expert : +27 (010) 203 4300 QuickBooks Online User Login Additionally, remuneration packages also include a roster of cash Legal - RSM South Africa. REPUBLIC OF SOUTH AFRICA Not reportable Of interest to other judges THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN JUDGMENT Case no: C 763/15 In the matter between: MARINIQUE DE WET Applicant and WORLD LUXURY HOTEL AWARDS (PTY) LTD Respondent Heard: 29 -30 August 2016 Delivered: 1 September 2016 (3) New appointees will receive a pro rata 13th Cheque for the period from the date of appointment until the month of birth. If you were unpleasantly surprised by the tax bill on your 13th cheque, change the way you structure your salary package so you lessen the tax impact. How to negotiate your retrenchment package, Structure your 13th cheque so you receive your full bonus. The calculator only calculates for 48 months of benefit that is claimable. 45 14 South Africa | Site secured by Comodo Security. Franks monthly tax payments on his standard salary would be R793.33. *The following are NOT included in its computation: -Allowances including COLA. Of course, that means that for the other 11 months, their monthly take-home pay will be less than someone who pays all the extra tax in the month the 13th cheque is paid. If this check box is selected, and you select that a 13th cheque must be paid to an employee, the system will do the following calculation in the bonus month to determine the bonus value: Fixed Salary / 12 x periods in service in the bonus period. Donate to a charity: You can donate up to 10% of your taxable income to a SARS registered charity and claim a tax deduction on this donation. HMs0{"K:QSuGALIJM$H4Vhx}We-f@A"Dzg?QE2"QLD$q"LFIWU+ u]R3$b t>5 Z'SjqWbS&n+2J ,>w'8A8qk=OZ|P+y>jfk rN F= If bonuses do not accrue on a pro-rata basis management will have to estimate the number of employees that will still be employed at the bonus payment date and a provision will have to be recognised. Structure your 13th cheque so you receive your full bonus - Maya on Money, Surprising increase in household net wealth. While we hope the information provided on this site will be useful in making financial decisions. Service bonus 13th cheque. 1 July 2012 Circular; Accommodation on official journeys outside the Republic of South Africa. RSM is the trading name used by the members of the RSM network. it is not to be viewed as advice. Use our free online SARS income tax calculator to work out how much your monthly salary will be taxed for in 2021/22 based on the South African budget. But if you get a guaranteed 13th cheque of R26 000 it means your taxable income is actually R338 000. Its so easy to use. As the Christmas season approaches, some lucky employees will be looking forward to a bonus or a 13th cheque. As with a 13th cheque, the bonus might take an individual into a higher tax bracket, resulting in higher than usual deductions in the month it is granted. Join a medical aid scheme: Receive a fixed monthly tax credit for you as a primary member if you contribute to a Medical Aid. The reason for this is that the double cheque may have placed them into a higher tax bracket, and thus make them liable for a greater tax deduction. 13th cheque and bonuses; Use of company property such as car, petrol card, computer/notebook, software etc. 13th month salary is South African households real net wealth increased by just over R1 trillion since the first quarter of 2020, according to the latest Momentum-Unisa Household Wealth report. However, tread carefully here. Wallace Albertyn is a Senior Associate and Labour Law Practitioner at LabourMan Consultants. How you tax 13th cheque bonus if you earn 14560. Age. MORE and more companies are moving towards performance-based bonuses rather than the guaranteed 13th cheque. You can check your employees tax calculation ("View Tax Calculation" button the payslip) and you can check the calculation against your manual calculation. Both amounts need to be taxed, and you need to understand how this is done. Many South African companies now offer employees performance bonuses instead of thirteenth cheques. Click on our Sage University link to sign up for the free training. It's the season to be merry and some IOL readers will be toasting their employers this Christmas as they receive their 13th cheques - but over two thirds will go without. It could include the following: Gross salary; Company contributions to medical, pension/provident, UIF, SDL, group insurance etc. Therefore, commission should be included in the calculation. SUMMARY. Please make use of our income tax calculator to work out the annual tax you will pay on your income. 0000001257 00000 n Most countries in Latin America mandate the 13th month pay, while in Europe and Africa it is customary but not required by statute. to structure their package in such a way that the 13th cheque, which is equivalent to 6,5% of their total cost to company, is paid out in December. [6] The First Applicants contract of employment dated July 2009 is identical to the standard contract of employment. However, specific provision for this could be in a contract of employment, company policy or maybe a collective agreement for a specific industry. Salary Tax Calculator: calculate how tax changes will affect your pocket. 13th Cheque vs performance bonus what You need to know. South Africa: It Is Not Compulsory For An Employer To Pay A 13th Cheque To Its Employees 07 December 2011 . xref 0000001789 00000 n That way, the 13th month bonus will not be an additional employment cost, and could be included in the employment contract as a part of annual stated compensation. %%EOF A 13th cheque or bonus is a great opportunity to settle expensive debt and make a start toward savings for emergencies, your childrens education or retirement. To make the most of your extra cash this year, take some time to ensure you have considered these few important elements, which believe it or not also includes spoiling yourself. According to Jetro Malapane, member of the Executive Committee of the South African Payroll Association (SAPA) it is Its that time of year when we all make our New Years resolutions. 0000000890 00000 n According to the South African Labour Guides website, a 13 th cheque or Christmas bonus is normally classed as a gratuity in other words, a payment of gratitude by the employer to the employees in recognition or a job well done, of if you like, going the extra mile. On 15 January 2021, the President gave his assent to the Rates and Monetary Amounts and Amendment of Revenue Laws Act No. You may also wish to pay an employee their full salary even though they did not work the full period. Spend the 13th cheque wisely. Simply enter your current monthly salary and allowances to view what your tax saving or liability will be in the tax year. all the costs associated with your employment contract. 88 as basic salary before deduction This entry 2015 at 16:13 It will be added to your salary and taxed per the normal PAYE rates. xb```f``b@ AN`B%LW-*qx'4/qva$=Sy,@cvgK51t/ -@$CZJ% YdqjYo2{gZ'IQ5V^CB.l 0000001755 00000 n The 13th cheque Since I've never worked in another country, I don't know if this concept is as popular as in South Africa. A 14th annual salary cheque has become so standard among the communication regulator's staff, that only 12 of its 335 employees did not receive one 7. 0000005349 00000 n A 13th cheque is 8.33% of the individual's annual salary which is paid at the end of the year or whatever time agreed upon, while a performance-based bonus 0000000576 00000 n A bonus is usually awarded only at the discretion of the company. -Absences, Unpaid leaves & Maternity leave. In many other countries, an additional bonus is customary or set by industry groups, but is not legally binding. How do I calculate PAYE on a 13th cheque. - 153 - South Africa 1.4.3 Payment Association of South Africa The Payment Association of South Africa (PASA) was established in November 1996 to act as the governing umbrella body of all Payment Stream Associations (PSAs) (also see 6.1). South Africa: It Is Not Compulsory For An Employer To Pay A 13th Cheque To Its Employees 07 December 2011 . Sole proprietor vs private company: which should you choose? cash, cheque, electronic transfers. If you are fortunate enough to receive a 13th cheque or a bonus payment at the end of the year, should use at least part of it to reduce the capital portion of their home loan. Ten ways the Budget affects your personal finances: Your tax rate is not going up! 62.3 The respondent is ordered to pay the applicant compensation in the sum equivalent to one (1) year remuneration calculated on the rate of pay applicable for his last year of service. Get further credits for your first dependent and additional dependents. 2016 Tax Calculator 01 March 2015 - 29 February 2016 ( / ) Period. by As the year comes to an end, many employees will be expecting payment of a 13th cheque or Christmas bonus from their employer. Select Working Days as the Pro-Rata Method and the date that you want to start using this pro-rata method for. To change the pro-rata calculation method: Go to Settings > Payroll Calculations > Pro-rata Method. Daily Weekly Monthly Yearly Periods worked. Bear in mind that the income tax deductible will be greater than normal ask the employer for an estimate from the applicable tax tables. While a 13th cheque forms part of the total package offered to an individual, a bonus is a variable amount linked to the companys performance. trailer As a starting point it must be accepted that there is no automatic right to a 13th cheque or a bonus in South African labour law. 0000000016 00000 n Note: The Bonus is an irregular income and if you didn't setup a provision for tax prior to the bonus payout, the tax will always be exceedingly high in a period when a Bonus is being paid. In Congo, historical practice dictates as many as 16 guaranteed monthly cheques, with extra ones coming in on an employees birthday month, the month he or she joined the company, 1 June and 1 December. Did you know that Sage is offering free complimentary training for leave and bonus? 45 0 obj <> endobj 13th cheque, which is common practice across most of Africa. So it is possible that a bonus / 13th cheque would push a 13th cheque) must be calculated pro rata. If you are receiving a 13th cheque or a bonus, make sure you understand how it has been calculated, and then take a resolution to spend it wisely as well. ISSUE. It's again time for that 13th cheque: Is an employer obligated to pay annual bonuses? However, specific provision for this could be in a contract of employment, company policy or maybe a collective agreement for a specific industry. 0000000970 00000 n Under 65 Between 65 and 75 Over 75 Income. Frequently, however, people express surprise that their 13th cheque doesnt translate into double their typical take-home pay. -Commissions, Incentives, Bonuses. Is the payment of a bonus legally required in South Africa? Meanwhile, employees are asking I didnt get a bonus this year arent I entitled to one? There is often confusion around this, with many employees expecting payment of a profit bonus, and even believing that theyre entitled to the payment of an annual bonus in terms of South African labour law. 58 0 obj<>stream Feel free to ask follow up questions before you rate. 13th month pay is equal to the Total basic salary EARNED during the year divided by 12. By Cathie Webb, Director, South African Payroll Association. The 13th cheque is really an African thing, because many of the African countries also provide base salary plus add-on, and then a 13th cheque on top of that. calculated automatically for salaried employees whenever a payslip is not for a full month Choose payment facility per employee, e.g. The majority of pensioners in South Africa when they worked did not earn enough to support their families and save for their retirement. This is when South African workers are entitled to a 13th cheque With South Africa's second coronavirus wave looming large after a difficult year, some will UmY''/,6F*gS.L,8+W=v\.b3f:n7`A};p{. Companies use the term Cost to Company to calculate the total cost to them (the Company) to employ you. In the case of a 13th cheque this is easy to determine if assumed that the bonus accrues on a pro-rata basis as services are rendered by the employees. Whatever the case, employees should inform themselves about the policy implemented by their particular company, and how the deductions work. 0000002136 00000 n A payment received in a particular period in respect of a longer period (e.g. The reason for this is that some companies factor in the 13th cheque by deducting extra tax each month, so that the December take-home pay is virtually double the normal one. (5) If a member restructures his/her package from a position where a 13th Cheque HAS BEEN structured to a position where a 13th Cheque IS NOT BEING structured, the Read more: bonus payments, South African Payroll Association, 13th cheques, bonuses and 13 paycheques, 13th cheque, Cathie Webb Related Survey reveals sober salary expectations 5 Nov 2019 The company would need to pay bonuses and thirteenth cheques in accordance with whatever agreement or arrangement has been reached and is recorded in these documents. JOHANNESBURG This means that the same benefits apply whether you accepted the package voluntarily or were forced to take it. Our online salary tax calculator is in line with changes announced in the 2021/2022 Budget Speech. This will result in a legal obligation. We are now in the months of BER where Month of December is coming and now may be the best time to talk about the 13th month salary. Most countries in Latin America mandate the 13th month pay, while in Europe and Africa it is customary but not required by statute. Cost of any loans, bursaries and interest-free or low interest loans; Cost of any expenses paid on your behalf such as insurance and telephone at Where employees are retrenched the Basic Conditions of Employment Act (BCEA) requires employers to pay the retrenchees severance pay of at least one week s remuneration per year of completed service. It bears mentioning that anyone who gets a 13th cheque in the current economic climate is very lucky indeed. Nov 14, 2018 We are in the middle of November and employees across the country are without a doubt already busy making the most wonderful plans with their Christmas bonus that has been paid or about to be paid. When they reached retirement age, their only option was to go onto the state old-age pension. Reasons for this vary, from being retrenched from a salaried position to With the planned re-opening of schools some time over the course of January, parents are bracing themselves for the annual grudge purchase of back-to-school essentials. 0000001099 00000 n Countries that Mandate 13th Month Pay. Use your 13th cheque or bonus to cut debt and save thousands News The calculation methods above may not apply to all circumstances, Dirmeik Consulting is a member of the South African Institute of Professional Accountants . Whether an employee employed on a fixed term contract is entitled to be paid a 13 th cheque where his contract does not provide for one but there is a practice and procedure of paying a 13 th cheque to all other employees?. For purposes of the calculation and application of allowances and benefits w.e.f. 0000005919 00000 n If you are fortunate enough to receive a 13th cheque or a bonus payment at the end of the year, you should read this! I have been contributing to UIF for the past 15 years without claiming and would like to know if that would be taken into concideration when the payments are calculated. As the Christmas season approaches, some lucky employees will be looking forward to a bonus or a 13th cheque. This will only worsen in April this year when we expect to see an overall 15% increase in the Eskom standard rate. -Overtime, Night Differential & Holiday Pay. Speaking on the sidelines of a donation ceremony that saw the elderly in Bulawayos Luveve suburb yesterday receiving food hampers, Finance Minister Mthuli Ncube promised civil servants their bonus and said they will get their 13th cheque, Sunday News reports. Many South Africans have recently found themselves feeling the need to venture into business outside of the formal, corporate framework. Feel free to ask follow up questions before you rate. As a starting point it must be accepted that there is no automatic right to a 13th cheque or a bonus in South African labour law. - 153 - South Africa 1.4.3 Payment Association of South Africa The Payment Association of South Africa (PASA) was established in November 1996 to act as the governing umbrella body of all Payment Stream Associations (PSAs) (also see 6.1). 13th-month pay vs Christmas bonus . Frequently, however, people express surprise that their 13th cheque doesnt translate into double their typical take-home pay. President Cyril Ramaphosa has given effect to the 2020 tax proposals by signing three tax Acts into law. Click Save. Usually, the amount is taxed when it is paid out. Trying to understand what the average household spends in South African is virtually impossible By Jean du Toit, Tax Consulting SA. Nov 9, 2015. Bookmark the permalink. A history of South Africas currency. day of service. Labour Guide your guide to labour law in South Africa namely the Christmas bonus or 13th cheque as it is known, the performance bonus and the production bonus. Simply enter your current monthly salary and allowances to view what your tax saving or liability will be in the tax year. In some companies like the ones I worked at, you could guarantee you're 13th cheque with a clause in your contract, to split your salary over 13 payments instead of 12 per year. The law makes no distinction between voluntary retrenchment and forced retrenchment. Our online salary tax calculator is in line with changes announced in the 2021/2022 Budget Speech. by As the year comes to an end, many employees will be expecting payment of a 13th cheque or Christmas bonus from their employer. 0000002680 00000 n Its so easy to use. The 13th cheque is really an African thing, because many of the African countries also provide base salary plus add-on, and then a 13th cheque on Now assuming Frank earns a R10 000 bonus, his gross income for the year would be increased to R130 000 (tax on R130 000 is calculated as follows R130 000*18% = R23 400 less primary rebate of R12 080 =R11 320). e`X Xl?1:82BtF jP[5.8i& bz@X Y:c Salary Tax Calculator: calculate how tax changes will affect your pocket. Labour Guide South Africa offers a wealth of Labour Law information and documentation to attorneys, companies and individuals. 0 If you require financial advice you need to contact a registered financial advisor. Though less common than in Latin American countries, some countries in Europe and Africa require employers to pay 13th and 14th month bonuses examples include Spain, Portugal, and Greece. Additionally, remuneration packages also include a roster of cash The secret to a successful resolution is to keep it simple and to break it down to something manageable. Re [30 April 2007] The sum of R30 371,56 together with interest thereon calculated at 15,5% as from 30 April 2007. If you were to pay your tax on your 13th cheque 22 of By Ruan van Jaarsveld, Manager at Hobbs Sinclair Advisory. startxref In most cases, the employee has a right to receive a 13th cheque or a performance based bonus as per the employment contract. The reason for this is that the double cheque may have placed them into a higher tax By Cathie Webb, Director, South African Payroll Association. 0000002060 00000 n Different regimes may also apply within the same company for some reason. This schedule applies only to the minimum payments that an employer is required to make in terms of the Basic Conditions of Employment Act, 1977. (2) The 13th Cheque will be paid on the day the member is normally paid his or her salary and allowances. Countries that Mandate 13th Month Pay. 13th cheque, which is common practice across most of Africa. Sadly, there are many scams Electricity is a major household expense for everyone. Aside from the 13th-month pay, many employees get another benefit called Christmas bonus. However, this is purely dependent on the employers initiative as it isnt mandated by law. That way, the 13th month bonus will not be an additional employment cost, and could be included in the employment contract as a part of annual stated compensation. In South Africa, when calculating the retrenchment payout for a Sales Rep who earns a basic salary plus travel allowance - Answered by a verified Lawyer. In Congo, historical practice dictates as many as 16 guaranteed monthly cheques, with extra ones coming in on an employees birthday month, the month he or she joined the company, 1 June and 1 December. 13th cheque and bonuses Contact Dirmeik Consulting. RSM South Africa is a member of the RSM network and trades as RSM. 0000001833 00000 n Although companies tend to follow one approach to handling tax on 13th cheques in order to reduce administrative overheads, some companies are prepared to be flexible in order to suit employees wishes. (b) 13th Cheque (1) The 13th Cheque is an annual payment in the month of birth. This pro rata 13th Cheque is calculated for the period from the last date on which the member received his/her last 13th Cheque until the last day of service. One source of confusion is that people often hear from friends in another company, or even their own company, that they in fact did receive a full double cheque. A 13th Cheque: Is there such an annual obligation. %PDF-1.4 % The law does not tolerate differentiation between employees performing the same or similar work unless there is a lawful justification for this differentiation. These including stationery, textbooks, sports kit and other required equipment.