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    Salary or Provisional Tax Payer?

    Someone who previously worked in the corporate world - resigned at the end of December to run their own cc (cc is already running & employing 2 or 3 staff, however they have never taken out money from it)
    Would it be more advantageous to run a members drawings account & pay provisional tax, or would it be better to draw a salary & pay paye if eg they wanted to earn a gross of R32 000?

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    Silver Member geraldenek's Avatar
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    If the member contributed start up capital exceeding the salary amounts, i would suggest just repay the loan and no tax is imposed.

    going back and paying the paye will attract penalties and interest.

    It is always better for the member to earn a salary – if they need proof of income for some or other reason, so I would suggest make a repayment of loan for the old amounts and for the end of this month, start paying a salary and paying over paye.
    Geraldene Kapp
    Professional Tax Help
    www.mytaxhelp.co.za

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    Quote Originally Posted by geraldenek View Post
    If the member contributed start up capital exceeding the salary amounts, i would suggest just repay the loan and no tax is imposed.

    going back and paying the paye will attract penalties and interest.

    It is always better for the member to earn a salary – if they need proof of income for some or other reason, so I would suggest make a repayment of loan for the old amounts and for the end of this month, start paying a salary and paying over paye.
    Agreed

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