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Thread: PAYE: some salary questions

  1. #1
    just me duncan drennan's Avatar
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    PAYE: some salary questions

    I have a couple of questions about paying myself. Obviously the main goal is to reduce the overall tax liability of both myself and my company as much as possible, so my questions are mostly about how to structure the payments.

    One thing I'm not sure about is travel expenses (which are very low in general),

    • Do I have to pay myself a "vehicle allowance" to deduct expenses?
    • Can I (in personal capacity) claim against the company, at say AA rates, for km's travelled? (will keep a log book for this)


    I normally put aside 10% of my gross income for donations purposes. I know that in my personal capacity I can reduce my tax liability by up to 5% of taxable income if the donations are made to a suitable Sec 21 company.

    • How are donations (of this sort) handled if done directly through the company?
    • What is the most tax efficient way to structure this type of donation?


    I pay into a medical aid and RA in my personal capacity. I know that the RA payment can be deducted (up to 15%) and the medical aid (R500 for first two members, R300 for further members),

    • Can the company factor this in when calculating the PAYE tax liability?
    • Does the company need a tax directive to take this into account when paying me?


    I've sent a mail to my accountant asking these questions...he just hasn't gotten back to me yet , so I decided to ask my quick response friends here
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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by dsd View Post
    I pay into a medical aid and RA in my personal capacity. I know that the RA payment can be deducted (up to 15%) and the medical aid (R500 for first two members, R300 for further members),

    • Can the company factor this in when calculating the PAYE tax liability?
    • Does the company need a tax directive to take this into account when paying me?
    Probably the only point that I'm comfortable giving a firm answer. The rest of your questions raised I normally leave to my accountants. It would be great to get a tax consultant on board here....

    There definitely needs to be a tax directive. The employee must make application to SARS for a tax directive and then present the directive to the company. The company must keep the tax directive on file. Application can be made via eFiling.
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    Quote Originally Posted by Dave A View Post
    There definitely needs to be a tax directive. The employee must make application to SARS for a tax directive and then present the directive to the company. The company must keep the tax directive on file. Application can be made via eFiling.
    I phoned my friendly tax consultant about this...that is I phone SARS.

    According to the telephonic conversation that I had with them there is no need to obtain a tax directive for this purpose. The company can take the payments into account with out any SARS documentation.

    I think that it would generally be a good idea to keep some form of documentation (e.g. employees RA fund number, etc) just as good practice.

    (Just in case - I am not a tax advisor, I am not a financial advisor, any action taken on any items does not constitute financial advise. Please seek final advice from a professional)
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    Site Caretaker Dave A's Avatar
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    I'll have to reach for my not so little book from SARS. I know that is how I was told to do it - admittedly about 2 years back - for a staff member's personal medical aid.

    I love the disclaimer - ditto for me and anyone else who makes a post on this forum unless they clearly state otherwise....
    The trouble with opportunity is it normally comes dressed up as work.

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    Platinum Member Marq's Avatar
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    I am not a tax advisor, I am not a financial advisor
    Somewhere in life I became a Professional Accountant and I am still not sure if I can be a financial advisor or a tax advisor without consulting the insurance industry, the banking industry and every other industry other than the one I used to belong to. That being said I never specialised in the these subjects so not much help there.

    What I do remember though, Duncan is that everthing has to be taken into account in calculating your PAYE. If its not a direct payment then its most likely a benefit thing. Last I looked there was very little one could do to structure pay packages to individuals. To go into your second query , I would think that the tax man would not to produce a tax directive for companies every time an employee changed or looked at a policy. They have enough problems just keeping up with the basics they have put in place. Most of the time they rely on the companies to police the show for them.

  6. #6
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Marq View Post
    Most of the time they rely on the companies to police the show for them.
    More like hold companies responsible
    The trouble with opportunity is it normally comes dressed up as work.

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