Have you ever heard or asked one of the following questions?
This is a bit of a complicated question with various possible answers. We will discuss the most common ones in the next few articles.
The most important fact to remember is that tax is based on a yearly income. All tax paid during the year of assessment, called PAYE (Pay As You Earn), is just contributions to your annual tax liability. In other words, even if your monthly tax is off by a few rand, it is the yearly total that is important.
When employers do their reconciliation at the end of the year, they do their final correction of your tax in the last pay period of the tax year. Some of the methods used are designed to minimise this difference during the last pay period.
Different types of calculation the employer may use.Back to article index