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Thread: Employer not deducting tax

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    Employer not deducting tax

    I work full time for a single employer. The employer does not deduct *any* monies/tax from our monthly salaries, and says that it's our responsibility to sort it out with SARS. He considers us as contract workers.

    I have registered as a provisional tax payer with SARS, and have paid my yearly dues for the last couple of years.

    I was recently told that legally, this is not correct, and that the employer *must* register us for Income tax, deduct taxes monthly and issue us an IRP5 every year.

    I work only for this one company, so 100% of my income is from one source.

    What is the legalities around this? Ideally I'd like to be deregistered as a provisional tax payer, and let my employer deduct tax from my salary. Can I legally force my employer to go this route?

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    Platinum Member Mike C's Avatar
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    Definition of an Employee - "Any person (other than a company) who receives any remuneration or to whom any remuneration accrues"

    Remuneration means:
    "any amount of income which is paid or is payable to any person by way of any salary, leave pay, allowance, wage, overtime pay, bonus, gratuity, commission, fee, emolument, pension, superannuation allowance retiring allowance or stipend, whether in cash or otherwise and whether or not in respect of services rendered ..."

    The test applied to determine if a person is an "Independent Contractor"
    Is the contractor carrying on a trade independently of the 'employer'?
    Is the contractor subject to control or supervision either as to the manner in which he performs his duties or as to his hours of work?
    Does he spend more that 50% of his time on particular assignment at the client's premises?
    If no control is exercised and less than 50% is spent at the premises the person could be considered an independent contractor - otherwise money paid is considered remuneration.

    Accordingly even if the contractor IS subject to control and supervision he would be regarded as an independent contractor if he spends less than 50% of his time on the client's premises.

    Contrariwise, if he NOT under supervision and control he would still not be regarded as an independent contractor even though 100% of his time is spent at the client's premises.

    A contract which purports to set up an independent relationship but which then refers to periods of leave or to the working hours or lunch periods of the organisation clearly submits the person to supervision and control.

    There are severe (costly) penalties for under-deduction or non-deduction of employees' tax by an employer and strict adherence to the rules - however unpopular from an employee relationship point of view - is essential.

    Hope this helps.
    An education isn't how much you have committed to memory, or even how much you know. It's being able to differentiate between what you do know and what you don't. - Anatole France

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    Dave A (17-Oct-12)

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    Site Caretaker Dave A's Avatar
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    Gee - there are so many questions that need to be answered before a clear answer could be given, I think. Here's a few off the top of my head:

    Is your employer registered as an employer with SARS?
    How many other employees are employed by the company?
    Do you have to report to a place of work?
    What is the nature of your work?
    Do you have an employment contract?

    EDIT: Mike's post probably does a better job of identifying the issues that need answers.
    The trouble with opportunity is it normally comes dressed up as work.

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    Thanks, that answers alot of questions. It sounds as though I have a leg to stand on.


    Is the contractor carrying on a trade independently of the 'employer'? - No
    Is the contractor subject to control or supervision either as to the manner in which he performs his duties or as to his hours of work? - Yes
    Does he spend more that 50% of his time on particular assignment at the client's premises? yes - 100%

    Is your employer registered as an employer with SARS? - Don't know
    How many other employees are employed by the company? - 10-15
    Do you have to report to a place of work? - Yes
    What is the nature of your work? - IT / Support
    Do you have an employment contract? No :-(

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    Site Caretaker Dave A's Avatar
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    The wise course is probably to recommend to your boss that he/she stops being an ostrich.

    They're going to have to bite the bullet and do things properly sooner or later. And the longer they put it off, the bigger the potential for fallout will be.
    The trouble with opportunity is it normally comes dressed up as work.

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