[Question] Personal Service Provider Questions(very confused)

[PSPstarter]

Hi All
I have a few questions regarding a PSP type company.
After reading all the Sars intepretation documents I am definately in the PSP category.
However ive struggled getting infomation i need to start up.

1. Does my client withhold employee tax at a rate of 33% or 28%? I see both values in the docs
2. When I sumbit my IRP5 form will I get money back as the tax rate above is more than I would get taxed if I was paid as an individual?
3. if i employee a secratary who is under the threshold do I still need to submit EMP201 forms?
4. According to the intepretation a psp is allowed to deduct wages and salaries
- where do I fill in these deductions?
- When do I fill in these deductions?
- What form do I use for these deductions?
5. Is it better to be and individual or a PSP?

Many Thanks
PSPStarter

[Jddt]

Hi

Labour brokers and personal service providers are regarded as deemed employees for tax purposes.

The implications thereof is as follows:

1) PSP is subject to PAYE at a rate of 28% currently it was 33% in the 2012 financial year.
2) The deemed employee in this case you can apply to SARS for tax directive a lower rate of tax to be applied, however it is at the lower rate of 28% so this should not be an issue.
3) With regards to deductions - These are limited to the remuneration paid out to employees, pension fund contributions, fuel etc all costs basically incurred exclusively for trade purposes.

You would claim these expenses under the relevant deduction codes in your IRP5. These codes range from 4001 to 4493.
So for example travel expenses are coded to 4015 and you just slot in the totals based on the calculations performed.

These expenses are claimed yearly in your income tax return year end Feb each year.

Hope this helps.

[PSPstarter]

Thx thats helps alot...been looking for that answer for months now.

Just to confirm
-so the rate of 28% is just a witheld rate. My final tax will be adjusted accordingly when i submit my IRP5 form.
-i dont need to fill in a monthly emp201 form for my secretary just deduct from my irp5
If sars requires proof of renumeration paid to employees what shall i submit to them?

Please excuse my ignorance.im a noob

Thx in advance

[Jddt]

Only a pleasure.

I missed that point of your sorry about that, if you pay remuneration to an employee as in this case you will have to register them for employees tax ( ie they should have a personal tax number ) and you as the employer will have to complete an EMP 201.

With that said there are some other considerations to make here:

1) SDL - Skills development levy will not apply - I am assuming you remuneration paid is less than R500,000 for the year, otherwise if more they levy is charged at 1%
2) UIF - The employee must be registered for UIF at the department of labour this tax amounts to 1% of the employees gross basic salary
3) PAYE - Tax calculated according to the tax tables here

The gross cost to company in other words would be tax deductable in your income tax return as expenditure incurred in the production of income therefore section 11a applies.

[PSPstarter]

So i have a monthly emp201 form
And a yearly irp5 form and thats it. Kewl.

If i have an employee who is under the threshold, basically i pay them weekly wages to keep the premises clean, do i still need an emp201 for them?

If my earnings are 20000 a month and my client withholds 28%. I have no other deductions. After my irp5 submission i should get money back as i was taxed at a higher rate than a deemed employee. Correct?