Tax Question on once-off commission

[Transport Exchange]

Hi All,

If I receive a a sum of money for example R1, 825 000.00 from a transaction concluded as a once off commission payment. What will the tax implications be and how will I work out the exact amount I need to pay Sars?

Will i be liable to pay VAT and register for VAT?

Hope you can help....

[Dave A]

Did you submit an invoice for the commission payment?

[Transport Exchange]

No, the payment is still to be made and I am unsure if we wil need to submit an invoice for this.

Do I understand correctly if I say that if I submit an invoice then I am liable for VAT and if I dont I need not to pay VAT?

I am not familiar with TAX and VAT laws as you can see.

Regards

[Dave A]

Do I understand correctly if I say that if I submit an invoice then I am liable for VAT and if I dont I need not to pay VAT?

Essentially yes - at least in most circumstances that come to mind.

If you don't submit an invoice, the "employer" will probably have to deduct 25% PAYE and issue you an IRP5 somewhere along the line.

For the purposes of assessing your total tax liability, it will probably be deemed as ordinary income and taxed accordingly in the end, but you might be able to deduct expenses incurred associated with the earnings.

I know the ability to claim expenses improves somewhat when over 50% of your income is earned in commissions. I have a sales rep in that position, but ultimately my accountants/auditors deal with those subtleties so I'm light on the details

[Transport Exchange]

Thanks for the guidance Dave, I think I will also consult a tax specialist

[Dave A]

For that kind of money, probably worth it

Some aspects are going to depend on the circumstances, I'm sure.

And if you can (ie. it's not too confidential), give an update here once you've had guidance - other people might face the same "problem" one day