Originally Posted by
Dave U
Hi Rudi
If you're paying this person for hours worked, i.e. effort, then as far as SARS is concerned he is an employee. Whether you structure your contract with this person as an employee or independent contractor is irrelevant.
Because SARS views him as an employee, you have to deduct from his salary and pay tax / PAYE (nowadays they're synonyms) over to SARS every month. If this person usually works at least 22 hours per week, the tax is determined by the tax tables. If not, then 25% must be deducted. (But if he gives you a written declaration that he will not work for another employer while employed by you, you can use the tax tables instead). SARS may hold your company liable for the taxes if you don't do the deduction.
You may want to read SARS Interpretation Note No. 17 - Employee's Tax: Independent Contractors, to further inform yourself. (Just google it). But I'm going to give you the relevant bits:
The document lists some "Near conclusive indicators of the acquisition of productive capacity (i.e. employee status or non-independent business status), and one of them is:
7.1.2: Payment Regime
A worker can be paid with reference to a result (in which the manner of use is not controlled) or to effort (the use of productive capacity in a specific manner for the payment period). Payment without material reference to result indicates employee status, because the worker is then being paid for effort. It should be noted that:
<< snipped some of the points to get to the important one, below: >>
Payment at regular intervals (whether at a fixed rate per time interval or at a fixed rate per hour) which fluctuates depending on the hours actually worked, but without material reference to output or result for that interval, indicates that there is an acquisition of a worker’s effort (productive capacity), as opposed to a result of effort (productive capacity deployed).
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