I have a loan with my employer, every month I pay them what I can afford so it differs from month to month, example I earned R20000. 00 this month I allowed them to take a deduction of R7000. 00, therefore they paid me R13000. 00 yet they taxed me on the R20 000. 00. My question is should I be taxed on the R13000. 00 or the R20000. 00 and should my IRP5 reflect the money paid into my bank account (the R13000. 00) or should it reflect the R20000. 00, I am just wondering because I am being taxed on the bigger salary so shouldn't it show somewhere that I am actually earning a lot less at the moment?
You are not earning the lower amount though, you earn R20 000 a month, yet are paying back an amount owed. See it as if you were paid R20 000 each month less tax into your account and then you actively make an EFT into their account for the loan amount. So it is correct to be taxed on what your actual salary is.
Brandonsays: 15 June 2015 at 10:35
Thank you, if you say it like that then yes it makes sense. That helps alot.
TaxTimsays: 15 June 2015 at 10:54
Glad we could help!
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