With some basic professional training with practical examples, understanding the basics of tax can easily be learnt with basic arithmetic.
This is according to Tanya Tosen, a tax and remuneration specialist at Tax Consulting SA.
Tosen says that learning what you are required to pay the tax man is vital.
If you look at your payslip each month and never know what the various deductions are for, here are a few tips to guide you.
THE BASIC FACTS
1. Fringe Benefits are taxed at different rates
Many payroll and finance specialists alike believe that fringe benefits are taxed at different rates, or a different tax table is utilized to determine the tax on fringe benefits.
Tosen says that with comprehensive tax training it can be proved that the tax on fringe benefits utilizes the same tax table which is gazetted for individuals on an annual basis.
2. My income is taxed at a fixed percentage according to my marginal rate
This common misconception is totally inaccurate. South Africa’s tax table utillises a progressive system. This means that a portion of your income is taxed at a specific percentage as your income increases through the tax table, according to Tosen.
3. Cost to Company is taxed higher than a Basic Plus remuneration structure
This assumption in the market is completely inaccurate. With the correct training, employees learn that tax is calculated on each payroll element and not on the remuneration structure adopted, says Tosen.
“The remuneration structure utilized in a company makes not different to the tax.”
4. IRP5 codes taxes items at different tax rates
Another misunderstanding is that the IRP5 codes dictates different tax rates to utilize for tax calculations, argues Tosen.
“This is totally inaccurate as well and the specific IRP5 codes dictate how each element should be treated for tax calculation purposes only.”
5. You need a degree to understand the mechanics of PAYE
“All employees who understand basic arithmetic can understand the mechanics of PAYE while performing practical examples as opposed to a static powerpoint presentation. With basic mathematical skills understanding PAYE is as easy as 1 + 1.”
Professional Tax Training
“As daunting as it is, understanding PAYE on your payslip is not as complex as employees may think. By deconstructing the mechanics and understanding the basics with practical examples, the correct tax training can be an enjoyable experience for all employees alike. Whether you are an experienced payroll, HR, finance or tax professional, or a general employee, practical tax training paves a solid foundation in understanding this key component on your payslip”, Tosen concludes.