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How do I calculate Monthly PAYE correctly

Posted 23 June 2015 under Tax Questions



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Sharon says:
26 May 2015 at 20:04

When calculating and employee's monthly PAYE shouldn't the tax rebate amount be deducted off the taxable salary amount upfront?

So an employee (28 years of age) earning R 10 500. 00 per month = Annual Salary of R 126 000. 00. Should the monthly PAYE be calculated as follows:

R 126 000. 00 * 18 % = R 22 680 - (2016 rebate amount) R 13 257. 00 = R 9 423. 00/12 = R 785. 25 monthly PAYE due. Or Should the calculation be done as follows R 126 000. 00 * 18% = R 22 680. 00/12 = R 1890. 00 monthly PAYE due. I believe the first calculation is the correct way to deduct the monthly PAYE for 2016 and would really appreciate it if you could confirm or correct my logic.

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TaxTimTaxTim says:
26 May 2015 at 22:38

Yes the first option is correct, the primary rebate comes off the taxes owing based on the income earned.


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