[Question] Salaries manually

[LGripper]

Hi, I am needing to calculate salaries manually. Have not done this for a long time, I have the PAYE monthly deduction chart, so I am fine with that. What I need to calculate is the tax deduction for the use of a company vehicle which is used to and from work only and petrol is not included.
They also have a RA and private medical aid, of which we pay the full amount, so if cost to company was eg. R 10 000.00, how would I calculate the deductions?

Thank you

[PayrollSmart]

Hi LGripper

The motor vehicle fringe benefit is determined by taking the original cost of the vehicle excl any finance charges, interest or sales tax and including the VAT (value added tax) and applying 3.5% on it assuming that no maintenance plan is included in the purchase price. If a maintenance plan is included in the purchase price use 3.25%. Once you have the determined value you should then make a call as to what the taxable amount should be based on the 80/20 principle. If your employee maintains a logbook and remains out of the office 80% of the time then the taxable amount should be 20% of the determined value that will be subjected to tax. If the employee spends 80% of the time in the office then use 80% of the determined value as your taxable value.

The amount paid over to the medical aid by the employer is fully taxable in the hands of the employee as it increases the employees remuneration. The employee will however receive a tax credit as approved by SARS to be R242 for the first adult and R162 for dependants thereafter.

The greater of 15% of taxable income other than from retirement funding employment or
R3500 less current pension fund contributions or
R1750.
Any excess amount is subjected to the following year of asssessment. Arrear retirement fund contribution maybe R1800 per annum. Any excess amt may be carried over to the next year of assessment.

Hope this helps you.

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