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Contract Workers FAQs

Posted 6 March 2017

Contracting Benefits vs Salary?
You will still be able to claim deductions for medical, travel and RA directly regardless of how you are earning income.

Contract worker and the tax effects?
Contractors are taxed if they earn above the threshold. This is the same as a full time employee. 

Tax Thresholds? 
For the 2018 tax year, anyone under 65 years of age earning above R75 750 will not pay tax. 

IRP5 FAQs

Posted 22 February 2017

What is an IRP5?
An IRP5 is the employee's tax certificate that is issued to him/her at the end of each tax year detailing all employer/employee related incomes, deductions, and related taxes. The employee uses it specifically to complete his/her income tax return for a specific year.

Do I need an IRP5?
Yes, you do if you were employed during the tax year.

Can I submit a return without an IRP5? OR Am I able to submit returns without my IRP5? OR Are you able to submit without the IRP5?...

Read more →

7 Types of Tax Directives

Posted 19 August 2016



Imagine you’re an estate agent or luxury car salesman. Chances are that you don’t earn much (if anything) as a basic salary and you rely on a few big deals and commission payments to keep you afloat during quieter months.

Or ima...

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Food for Thought on Subsistence Allowances

Posted 13 June 2016

You’ve been up since 4am in order to catch yet another red-eye flight for a 9am business meeting - 1,400km away - and you’re already onto your third coffee by the time you board the plane. While you’re fairly accustomed to the frequent business trips requiring out of town travel, you’re still somewhat confused by the tax implications of the subsistenc...

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Sole Proprietor or Company: What's Best for Tax?

Posted 31 May 2016

Getting a new business venture off the ground is an equally exciting and stressful time. You’re enthusiastic about getting your new product or service out into the market, but you face quite an administrative process to get it off the ground legally.

A decision that often stumps many small business owners is whether to operate as a sole proprietor or as private company, a PTY Ltd. We receive many questions about this from entrepreneurs wanting to know the tax implications of each route.

Read more →

Tax on Bonus Payments: How Does it Work?

Posted 19 April 2016

For those fortunate enough to receive bonus payments as part of your remuneration, you’ll understand the frustration of seeing one amount on your letter of bonus, but a dwindled amount reflecting in your bank account on payment.

We receive hundreds of queries from people with regards to what percentage tax they’ll have to pay on a bonus they’ll be receiving, either annually or as an adhoc performance bonus. Much like other variable incomes, such as commission, there’s a misconception that tax on a bonus payment is withheld at a higher rate.

The fact is that there’s no special ‘bonus tax rate’...

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How is Commission Taxed? 3 Ways Your Company Taxes Commission

Posted 14 April 2016

Our helpdesk receives hundreds of questions related to tax where commission is involved. A misconception that comes up time and time again is that people believe commission is taxed at a higher rate than what a fixed salary is.

This isn’t true!

Tax on commission is at exactly the same rate as a fixed salary.

The confusion comes from the fact that tax is calculated on a different amount each month (depending on your performance, of course), and this can result in different tax rates being applied month to month...

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What is Turnover Tax?

Posted 23 March 2016

Turnover Tax is a simplified tax system only available to sole proprietors, partnerships, companies or close corporations with a “qualifying turnover” of less than R1m per year. These types of entities are called micro businesses.

As the name implies, Turnover Tax is a type of tax, which is calculated against the turnover of a business, as opposed to a percentage of profit (i.e. income less business expenses) as per usual business tax. This difference reduces the administrat...

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What Medical Expenses Can You Claim Back from Tax

Posted 17 March 2016

Medical expenses are nothing to sneeze at. Private medical treatment is increasingly pushing the limits of medical aid scheme benefits and our wallets. It's an outlay few can avoid. Luckily, certain medical expenses come with a bit of tax relief in the way of tax credits.

A tax credit is a non-refundable rebate. This means that a portion of your qualifying expenses, in this case medical related spend, is converted to a tax credit, which is deducted from your overall tax liability (the amount of tax you have to pay SARS)...

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What You Need to Know About Changes to the Tax Clearance System

Posted 23 February 2016

Tax compliance makes its way into many aspects of life and business. Perhaps you’re considering applying for a tender, or for a foreign investment allowance to move funds offshore, or even looking to emigrate and leave our shores. These are just a few examples of instances where you may be asked by a third party to provide a Tax Clearance Certificate.

And until now, the course of action to obtain your certificate has been a tedious one.

Upon request, SARS would check its records and verify that the taxpayer had filed all required tax returns, paid all taxes, penalties and interest due, before releasing a Tax Clearance Certificate confirming a good standing...

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Thank you Minister - we expected worse! 2015 Budget

Posted 25 February 2015

New Finance Minister Nene delivers his first budget with some “better than expected” tax increases. The fight against corruption was highlighted with the minster announcing a series of reforms and procedures to be introduced both to curb corruption and make doing business with the state easier. The minister announced that R25bn would be saved in expenditure over the next two years, but R16.8bn is to be raised this year via tax increases and a remarkably large rise in the fuel and road accident fund levies. To be honest, we expected greater tax increases from the minister, thankfully he spared us some of the pain! ...

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How to calculate totals under source codes 3696, 3697 and 3698

Posted 29 July 2014

If you tried to submit your tax return and got an error relating to 3696, 3697 or 3698 then you might have simply left an amount out!
Check your IRP5 to make sure you answered TaxTim's questions for these amounts correctly.

 
Your IRP5 can show one or more amounts with source codes describing the income you received from your employer that year.

A common example would be:

Salary R240,000 - source code 3601 ...

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2014 Budget - A move to economic transformation

Posted 26 February 2014

In delivering what could possibly be his last annual budget and perhaps in an election year a very pragmatic one, Minister Pravin Gordhan painted a rather positive picture for the future of South Africa, whilst at the same time warning of the impact the global economy is having on the South African economy. He too, had a “good story” to tell of how well managed the economy is and how we have survived the economic downturn of the last half decade. The minister, like his predecessors b...

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How does Pay-As-You-Earn (PAYE) work?

Posted 30 July 2013

You may have seen the word PAYE on your IRP5 payslip or heard it mentioned by your employer, but have no idea of its meaning. All it really means is that you are paying the tax you owe to SARS on a monthly basis instead of all at once at the end of the tax year, hence PAYE means 'Paye As You Earn'. This is a good thing as it saves the taxpayer from having to pay between 18% and 40% of their earnings (the taxable amount) to SARS in cash once a year as a lump sum!

Employers are required to withhold these taxes each month and pay them over to SARS on the taxpayer's behalf...

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SARS Tax Tables for 2014

Posted 4 July 2013

Tax rates for Individuals and Trusts
Income tax rates: Natural persons (that's you) and special trusts.

2013 tax year: 1 March 2013 - 28 Feb 2014.

Individuals and Special Trusts:



Read more →

The effect of the 2013/14 annual budget speech on the average South African taxpayer

Posted 28 February 2013

It was with great enthusiasm that we at TaxTim awaited delivery by the Minister of Finance of his annual budget speech this afternoon, especially after some of the shocks experienced by taxpayers and tax professionals last year. Surprisingly he delivered a very mild budget in terms of individuals with the Minister stating, “No tax rises.” The main focus areas relating to tax in this budget speech were on compliance, tax evasion and big companies seeking to shift their income around the world in order to avoid higher taxes...

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SARS Tax Tables for 2013

Posted 18 January 2013

Tax rates for Individuals and Trusts
Income tax rates: Natural persons (that's you) and special trusts.

2013 tax year: 1 March 2012 - 28 Feb 2013.


Read more →

How to manage your tax affairs running a business in your own name as a sole-proprietor

Posted 1 October 2012

South Africa is brimming with entrepreneurs and small business owners who keep the economy running. These people may or may not be earning a regular salary too, but all of them operate a non-registered business in their own name - a so-called sole-proprietorship. In this blog post we will discuss how such a business pays tax, how it is taxed, and how to separate personal and business affairs to make tax deductions correctly.

To register or not to register as a company? ...

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SARS is asking for more documents. Are they auditing me?

Posted 13 August 2012

For most people upon submission of their year-end income tax return, either nothing much will happen or a refund will be due, this being paid back within a matter of days. However in a small number of cases SARS requires extra documentation or proof to be submitted so that they can verify that everything you submitted in your tax return is correct. Don’t be afraid, although many people consider this an “audit” it isn’t nearly as frightening as that and doesn't mean you have done anything wrong. A true audit would be SARS requesting years of past documentation and opening up for examination all your tax affairs from previous years. ...

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How do I calculate my earnings after tax? Try our income tax calculator

Posted 6 June 2012

Most employees negotiate their salary based on the gross amount (or cost to company) - the whole amount paid by their employer. Since income tax is deducted from this gross amount, in most cases the taxpayer doesn't know how much money actually goes into their bank account each month, after tax.

SARS levies employee's tax monthly and employers must pay that over to SARS every month. This tax is called PAYE (Pay As You Earn). PAYE is calculated based on your taxable income. This is different to your gross income and is calculated as follows: ...

Read more →

Do I earn enough to have to pay tax?

Posted 26 March 2012

Why must I pay tax, I don’t earn enough! Will I get a penalty if I don’t disclose all my income to SARS? These questions are common and usually include other sources of income such as interest from a bank account. If these earnings don't extend above the tax threshold then why disclose them and pay tax? Unfortunately while you may not have to pay tax on the income, you will certainly have to disclose it to SARS. Let’s assume you earn a salary of R200 000 a year and hav...

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New tax credit to replace medical aid deductions in post 2012 Tax Year

Posted 21 February 2012

The 2012 tax year has almost come and gone, and being annual budget time, anxious taxpayers are unsure what to expect. Is there any room to be taxed further? All will be revealed on Wednesday the 22nd, but in the meantime let's focus on the new medical aid tax regime.

Gone are the days of paying your spouse's medical aid and claiming the deduction just because you are in a higher tax bracket. From the 2013 tax year onwards that deduction is no longer allowed. Instead it will be replaced with a tax credit per dependent. "What is the difference?" I hear the average taxpayer ask, and "How does it affect me?" ...

Read more →

Taxable vs Accounting: Setting the record straight

Posted 23 January 2012

There is a widely believed myth that all expenses and incomes of a business can lower taxes. The Taxable vs Accounting deductibility argument is one which will forever rage on. The question is: what is the difference?

Many countries around the world stick to a particular set of accounting standards released by the International Accounting Standards Board (IASB), while those same countries have their own individual tax laws. This leads to a difference between what’s allowable for tax purposes and what’s allowable for accounting purposes....

Read more →

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Need help
submitting your
Tax returns?


TaxTim will help you:

 Do Your Tax Return Easily
 Avoid penalties
 Maximise your refund

Tim uses your answers to complete your income tax return instantly and professionally, with everything filled in in the right place.

Let Tim submit your tax return direct to SARS in just a few clicks!

Get started