Certain tax treatments seem unfair on the face of it – but taxpayers need to understand the rules, and make provision accordingly
DO YOU ever get the sense that SARS sometimes wants to have their cake and eat it? By this, I’m talking about situations where it appears that having already extracted tax on a particular amount received, SARS takes a second bite at the cherry.
And on the fact of it, that’s not fair!
I often get people griping about this apparent injustice – usually around the braai, when trying to recover from the mother of all carnivorous meals (because, according to Springbok loosehead prop Ox Nché, “salads don’t win scrums”), and the string that attaches my stomach to my eyelids is tugging hard.
But as you will see, the folks at SARS are not quite the bunch of ogres they appear to be – you just need to understand the rules.
Here are some common issues that cause much wailing and gnashing of teeth:
Gripe no. 1
“I received my payslip in February 2025 and was in a state of shock as my employer had deducted nearly ten grand from my salary as tax. In January 2025 my employer did not deduct any tax; instead I was given an amount of R657 as a tax rebate (never heard of this before).
I am extremely upset, and they blame the system that we use to work out these things and the fact that it’s the end of the tax season.”
One of the legacies of the introduction of the SITE system back in the 1990s is that the onus of ensuring that employees’ tax was calculated correctly was shifted onto the employer. While SITE has long been consigned to the dustbin of history, and despite everything being squared up on assessment, that onus remains.
While one’s tax liability is calculated monthly, an estimate of such liability needs to be made in advance, and 1/12 thereof must be paid over to SARS each month.
Since most employees earn fixed mon-thly salaries, the calculation is as simple as multiplying the salary by 12, working out the tax liability as per the tables, and then dividing that liability by 12 to calculate the monthly deduction.
The problem comes in when the salary changes, as it’s easy to forget to adjust the tax calculations – especially if you are running a manual payroll.
However, although computerised payroll systems are capable of doing these calculations each month with a great degree of accuracy, fluctuations still occur – especially if a particular allowance is loaded, and then backdated.
Also, having worked in a large corporate payroll department previously, I’m also aware that with ongoing daily work pressures, one is easily tempted to fix the tax calculations “next month”.
However, the end of February is the “day of reckoning”, and the correct liability must be accurately calculated so that the IRP5 certificates can be gene-rated. It is also the time of year where accurate calculations are possible, because the calculations are based on actual taxable income instead of an estimate.
If there is an over-deduction of tax, this must be refunded to the employee, whilst a shortfall must be deducted and paid across to SARS. This is what would give rise to a massive fluctuation (in some cases) on your February payslip. And while we all like refunds, none of us like to cough up extra!
Gripe no. 2:
“In April 2024, I left my old company for a much better position, and was paid out for my unused leave. They took off about a third of it as tax.
In my 2025 tax assessment, SARS want me to pay an additional tax on the leave pay that I received. Surely if I have already paid tax when I left, I should not be paying tax again?”
Oh, if I had a Rand for every time I heard this particular complaint!
What many people are unaware of is that when you leave an employer during the year, they are required to deduct tax based on the applicable tables. However, this does not take into account any other income, or the possibility of a significant salary increase at your new job.
This means that if your income has increased dramatically during the tax year (whether due to investment income, a capital gain, or – as in your case, a new job with a higher salary), the amount of tax that your old employer deducted will end up being too low.
Remember that monthly PAYE assumes that your salary from your employer is the only income that you will receive – and is therefore not necessarily your final tax liability.
This will only be determined when your return is assessed and all of your income is taken into account – and if your final liability exceeds the amounts that were deducted, you will be required to pay in the shortfall.
In this particular example, a further gripe is that since the pension withdrawal accrued in April 2024, why should further tax become payable in 2025? The rea-son is that the tax year runs from 1 March to the end of February of the following year.
April 2024 would thus fall into the 2025 tax year. However, the return for this period would have only been submitted sometime between July and October 2025, i.e. up to 17 months after the amount for the accumulated leave was received.
Gripe no. 3:
“How much do we get taxed on a company petrol card? I drive my personal vehicle, and I have a company petrol card.
Last month my petrol usage and car service was a bit high, and I paid R1 000 more tax on my salary. Does this sound correct?”
The benefit derived from the use of a company petrol card is treated as a travel allowance, and in terms of the Seventh Schedule to the Income Tax Act, 80% of such travel allowance is to be taken into account each month for the purpose of calculating and deducting employees’ tax.
Because of our progressive system of tax – which means that you are taxed in particular income ‘bands’ with higher levels of income being taxed at higher percentages, an increase in taxable income could push you into a higher ‘band’ which will up your tax liability.
With company petrol cards, the usage (and the resultant tax liability) will fluc-tuate with the amount of fuel used each month, and it is therefore possible that you end up moving between tax bands during the year.
It all comes out in the wash when you submit your tax return and claim your business travel against the allowance – however, this does not help the cash flow situation during the months between having the tax deducted and your tax return being assessed.
Therefore, if you should have a month of unusually heavy business travel, you need to budget for some extra tax as well!
Steven Jones is a retired tax practitioner and member of the South African Institute of Professional Accountants, and the editor of Personal Finance and Tax Breaks.
