Student Tax?

[zoedubruyn]

Hi, If anyone can help, I need clarification on the amount of tax I should be paying -

I work once a week, for 8 hours, I get paid R80 per hour, so that is R640 a day,
This month I made a total of R1860, and have been taxed 25% (R470)
I am NOT a temp worker, although I may be considered a 'casual' employee.

The reason that they give for such a high tax, is that apparently, if you are a student, working less then 22 hours a week, then you will be taxed 25%

Is this true?
I cant understand how I can be paying such a high tax, on such a small amount of money?

Thank you.

[eitai2001]

Hi, If anyone can help, I need clarification on the amount of tax I should be paying -

I work once a week, for 8 hours, I get paid R80 per hour, so that is R640 a day,
This month I made a total of R1860, and have been taxed 25% (R470)
I am NOT a temp worker, although I may be considered a 'casual' employee.

The reason that they give for such a high tax, is that apparently, if you are a student, working less then 22 hours a week, then you will be taxed 25%

Is this true?
I cant understand how I can be paying such a high tax, on such a small amount of money?

Thank you.

I'm studying tax, and never heard such a thing, it's definitely not in the tax rate table I have. Do they give you a payslip, if so, take the payslips to SARS, if not ... ask them for payslips, and if they don't want to give you any ... report them to SARS / CCMA

[sterne.law@gmail.com]

I am afraid that 25% is the prevailing rate for what is termed a casual.
Less than 23 hours a month is termed casual from the LRA point of view, which in turn limits the scope of its application - that is not entitled to leave pay, sick pay, UIF etc.

I would be lying to try answer what the reasoning for the high tax rate is. I think it is to circumvent people from having multiple jobs and escaping tax liability. eg a person could be a waiter in 6 different shops/branhces. Thus working 40+ hours a week but in each less than 23 a month and not paying tax. Remember you may submit a tax return.

I am also not 100% clear on the tax and LRA cross-over implications - the income tax act and other legislation often have different viewpoints on issues, eg definition of employee. Hence, it is possible that the employer could still register you as a employee from a tax perspective without having to treat you as full time employee from the labour perspective.

[eitai2001]

Oh ok, I apologise then ... never knew that ... never even heard about it.

[geraldenek]

SARS have a specific ruling with regards to students and scholars and is as follow:

Full-time students and scholars do not fall in a specific category and are taxed in the same manner as any other employee. The employer must determine, according to the rules for standard employment and non standard employment (25% deduction), which applicable method of deducting employees' tax must be used.

Thus the only question is if it's standard or non standard employment and the definition for both is:

Standard Employment

Where an employee does not fall within the definition of standard employment, an employee will be deemed to be in standard employment if —
the employee (including scholars and students) is required to work for less than 22 hours a week and the employee furnishes a written declaration that he / she will not render services to any other employer, for the period that such employment is held, such employment is regarded as standard employment.
the employee works for at least 5 hours a day and receives less than R164 per day, such employee is deemed to be in standard employment.

Where the employer conducts his / her business in such a manner that employees render services on a regular or frequent basis for such periods as may be required by the employer the Commissioner may, after consultation with the employer or with any body or association on which the employer is represented, direct that the employment of such employees shall be standard employment. The Commissioner may further instruct the employer as to the manner in which employees' tax must be deducted. (Refer also to Temporary employees who are frequently employed in paragraph 14.8).

Non-standard employment (25% deduction)
Examples of non-standard employment:
- Workers not in standard employment employed on a daily basis who are physically paid daily.
- Casual commissions paid, such as spotter’s fees.
- Casual payments to casual workers for irregular services rendered or occasional services.
- Fees paid to part-time lecturers.
- Honoraria paid to office bearers of organisations, clubs, etc.

In my opinion i would say you fall under standard employment rules and normal tax tables should be used and no tax should be deducted.

[eitai2001]

SARS have a specific ruling with regards to students and scholars and is as follow:

Full-time students and scholars do not fall in a specific category and are taxed in the same manner as any other employee. The employer must determine, according to the rules for standard employment and non standard employment (25% deduction), which applicable method of deducting employees' tax must be used.

Thus the only question is if it's standard or non standard employment and the definition for both is:

Standard Employment

Where an employee does not fall within the definition of standard employment, an employee will be deemed to be in standard employment if —
the employee (including scholars and students) is required to work for less than 22 hours a week and the employee furnishes a written declaration that he / she will not render services to any other employer, for the period that such employment is held, such employment is regarded as standard employment.
the employee works for at least 5 hours a day and receives less than R164 per day, such employee is deemed to be in standard employment.

Where the employer conducts his / her business in such a manner that employees render services on a regular or frequent basis for such periods as may be required by the employer the Commissioner may, after consultation with the employer or with any body or association on which the employer is represented, direct that the employment of such employees shall be standard employment. The Commissioner may further instruct the employer as to the manner in which employees' tax must be deducted. (Refer also to Temporary employees who are frequently employed in paragraph 14.8).

Non-standard employment (25% deduction)
Examples of non-standard employment:
- Workers not in standard employment employed on a daily basis who are physically paid daily.
- Casual commissions paid, such as spotter’s fees.
- Casual payments to casual workers for irregular services rendered or occasional services.
- Fees paid to part-time lecturers.
- Honoraria paid to office bearers of organisations, clubs, etc.

In my opinion i would say you fall under standard employment rules and normal tax tables should be used and no tax should be deducted.

Could you please point me to a paragraph in the Income Tax act ... I didn't even know this existed

[Dave A]

Could you please point me to a paragraph in the Income Tax act

A quick "lecture" on Acts, regulations and notices...

Acts can only be made and amended by parliament, a major song and dance.

Regulations can be promulgated by the Minister empowered to make regulations in terms of the relevant Act, and need only be signed by the Minister and published in the Government Gazette to become law.

Notices can be made and published in the Government Gazette by pretty much anyone empowered and/or required to do so in terms of the relevant Act and/or regulation.

Accordingly, Acts tend to deal with the "big picture" as they are not easily amended, and will normally empower an authority to make regulations and/or make notices (deal with the detail) appropriate to the execution of the purpose of the Act.

Rather than us having to read the Government Gazette and keep track of all the legislative action, SARS publishes guides which takes into account all this action and pretty much tell us how to keep our end. These guides are normally updated annually and this page from SARS seems to be the latest collection on PAYE.

[Dave A]

In my opinion i would say you fall under standard employment rules and normal tax tables should be used and no tax should be deducted.

...provided that this criterium is met, I'd think

the employee (including scholars and students) is required to work for less than 22 hours a week and the employee furnishes a written declaration that he / she will not render services to any other employer, for the period that such employment is held, such employment is regarded as standard employment.

Without the declaration and based on an income of R640.00 per day, the employer would have to deduct the non-standard employment deduction.

[Dave U]

Hi zoedubruyn

Dave A hit the nail on the head when he mentioned the written declaration. All you need to do is supply your employer with a written declaration that you do not and will not render services to another employer during the period you are employed. They will then be forced to deduct tax using the tax tables, which in your case will result in no tax being deducted. You can also point them to section 11B (1) of the fourth schedule of the income tax act, point (b) under the definition of standard employment.

You should file a tax return at the end of the tax year to get the 25% already deducted back from SARS.

[geraldenek]

Could you please point me to a paragraph in the Income Tax act ... I didn't even know this existed

you can just have a look on the sars website for studens/scholars. it is prescribed in the guide for employers in respect of employee's tax

[eitai2001]

you can just have a look on the sars website for studens/scholars. it is prescribed in the guide for employers in respect of employee's tax

Ok cool, thanks