|
TaxTim says: 8 March 2022 at 15:13 Hi Tax Tim, I am a Personal Service Provider (PSP). My client withholds PAYE at 28% in the name of the PSP i.e in my company's name and not me personally, as an individual taxpayer. This concerns me because the PAYE tax credits sit in my company's name, but from an individual perspective I have not paid any tax on the salary I withdraw from my company. The PAYE refund, if any, will be paid into my company. How do I show the tax on my salary in my individual tax return? If I pay tax again on my salary, won't I be taxed twice? |
|
TaxTim says: 9 March 2022 at 17:51 The company and yourself need to be treated and considered as two separate entities and therefore will be taxed separately. You are correct that the PAYE that is withheld by your client at 28% will be in the name of your company; it can be set-off against the provisional tax payments you make in your company. If you pay yourself a salary out of the company then you would be taxed in your personal capacity at the relevant tax rates according to SARS tables. Your company would need to pay over the PAYE and issue you an IRP5. Your 'salary' will reduce the company profits and tax liability and therefore you would be due a tax refund in your company when you file your company's tax return. Depending on your monthly income, it might be better to trade as a sole proprietor if your marginal tax rate is less than 28%. |
