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Thread: What do i do to Pay tax?

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    Question What do i do to Pay tax?

    Hi

    Please anyone help, this is my situation:

    I just started a new job but they say i am contracted to them and therefore they don't have to deduct and pay my tax, but i've phoned SARS and they say if i spend more than 80% of my time at one employer, they must pay my tax. But my boss says his accountant says this isn't true.

    They not the most helpful people at my work so i just want to know how i can go about paying my tax. Because I haven't been working for a while and received a fine from SARS recently i have to pay because i didn't submit my last 2 years tax returns as i wasn't working i didn't know i had to. and I don't want another problem in the future.

    Any help will be much appreciated,

    Thanks in advance
    Justin

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    Gold Member garthu's Avatar
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    Justin i cant help with the 80% "law" there BUT i ALWAYS deducted tax (estate agents are less than 80% and no basic) and nothing ever went wrong.

    Secondly generally if SARS have said it, then do it is my philosophy. The bottom line is if they are wrong then a good accountant can sort it out, you get the money back, easy, if you are wrong, you pay and pay and pay... and then.... pay some more

    I dont know if anyone on TFSA can be more specific (and i do not claim to be knowledgeable with SARS by the way) but hear what they have to say..


    Best of luck
    Garth

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    Justin, are you registered as a provisional income tax payer or just a normal income tax payer?

    If you're registered as a provisional tax payer and your "employer" hasn't deducted PAYE, just make the appropriate top-up payment when you submit your provisional tax returns and the world will carry on turning.

    If you're not a provisional tax payer, it does get more interesting. Ultimately it's your "employer" that is in trouble if they are failing to deduct PAYE when they should - the responsibility is on their shoulders, not yours.

    Once you've informed your employer of the situation, I wouldn't fret any further pursuing the point with them. Let them and SARS argue about it if it ever comes to that.

    However, I would provide for paying a year's worth of tax when your annual assessment arrives. Maybe put what should have been deducted for PAYE into a seperate savings account - and don't be tempted to touch it. May as well score some interest...

    It might be an idea to register as a provisional taxpayer anyway if the "employer" is really sticking to their guns that you're a contractor. In fact, I'm quietly wondering whether you shouldn't rather register for turnover tax
    The trouble with opportunity is it normally comes dressed up as work.

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    Hi Justin

    It seems you've been misinformed by SARS. There are laws regarding 80% of revenue, but they apply to labour brokers and companies, not individuals such as yourself. So on that count, at least, the accountant was correct.

    The actual law that is relevant here is exclusionary subparagraph (ii) of the definition of "remuneration" in the Fourth Schedule of the Income Tax Act. What this law basically says is that, even though employers don't normally have to deduct income tax from independent contractors, they are legally required to do so in the following cases:

    • the worker is subject to the control of any other person as to the manner in which the worker’s duties are or will be performed, or as to the hours of work; or
    • the worker is subject to the supervision of any other person as to the manner in which the worker’s duties are or will be performed, or as to the hours of work; or
    • the amounts paid or payable for the worker’s services consist of or include earnings of any description which are payable at regular daily, weekly, monthly or other intervals


    Note that, if any of the above 3 points are true for you, they are legally required to deduct tax. I'm assuming, at the very least, that the third point holds (you're paid regularly), if not all of them. I hope that having a reference to the actual law helps to convince your boss and his accountant. Are they deducting tax for the other workers at the company? If not, it's almost certain that your employer is just too lazy to do it correctly. Remind him that the law also says that he will be liable for the taxes to SARS, not you.

    The bottom line is that simply calling someone a contractor does not make it so.

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    Quote Originally Posted by Dave A View Post
    It might be an idea to register as a provisional taxpayer anyway if the "employer" is really sticking to their guns that you're a contractor. In fact, I'm quietly wondering whether you shouldn't rather register for turnover tax
    As I mentioned in my post above, Justin can't legally be considered a contractor. That is, if my assumptions are correct: that he is employed as a natural person, doesn't himself employ others and is paid on a regular basis. The fact that his employer chooses to break the law doesn't mean he's no longer legally considered an employee. And turnover tax is obviously not for employees.

    But your turnover tax suggestion would be very good if the points I mentioned in my other post do not apply to Justin.

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    Site Caretaker Dave A's Avatar
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    Just a passing wicked thought, Dave U

    ...although not made entirely in jest. If you qualify as a contractor, make sure you use the options to best advantage.
    The trouble with opportunity is it normally comes dressed up as work.

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    Justin,

    I sometimes work as a contractor and SARS does consider contractors as "employees" because we "use" the chairs of the employees. On the other hand, you may want to register as a provisional tax payer and put the equivalent amount, that is due for tax, in a money market account.

    I presume you have an accountant or accounting officer or a payroll person. Provide all the information to the person and let the person calculate your monthly tax due, and pay it to SARS.

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    Quote Originally Posted by Dave U View Post
    Hi Justin

    It seems you've been misinformed by SARS. There are laws regarding 80% of revenue, but they apply to labour brokers and companies, not individuals such as yourself. So on that count, at least, the accountant was correct.

    The actual law that is relevant here is exclusionary subparagraph (ii) of the definition of "remuneration" in the Fourth Schedule of the Income Tax Act. What this law basically says is that, even though employers don't normally have to deduct income tax from independent contractors, they are legally required to do so in the following cases:

    • the worker is subject to the control of any other person as to the manner in which the worker’s duties are or will be performed, or as to the hours of work; or
    • the worker is subject to the supervision of any other person as to the manner in which the worker’s duties are or will be performed, or as to the hours of work; or
    • the amounts paid or payable for the worker’s services consist of or include earnings of any description which are payable at regular daily, weekly, monthly or other intervals


    Note that, if any of the above 3 points are true for you, they are legally required to deduct tax. I'm assuming, at the very least, that the third point holds (you're paid regularly), if not all of them. I hope that having a reference to the actual law helps to convince your boss and his accountant. Are they deducting tax for the other workers at the company? If not, it's almost certain that your employer is just too lazy to do it correctly. Remind him that the law also says that he will be liable for the taxes to SARS, not you.

    The bottom line is that simply calling someone a contractor does not make it so.
    Thanks a lot for the info.

    I have just sort of leftit and try not worry because its actually there problem, at least you say they will be liable.

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    Quote Originally Posted by JustinIT View Post
    Thanks a lot for the info.

    I have just sort of leftit and try not worry because its actually there problem, at least you say they will be liable.
    The best thing you can do in this case is walk into your nearest SARS office and explain your situation. They're there to help you. They can also help you get started with provisional tax if required. And as others have said, don't spend the money that should have gone to tax.

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