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Independent consultant and expense claims

Posted 22 March 2016 under Tax Questions



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Leigh says:
22 March 2016 at 12:48

I am an independent contractor and would like to find out how to calculate my salary due to me taking expense claims into account. Total salary = hours worked x Hourly rate
Expense claims = cell phone, internet and travel claims

To calculate tax amount you take your total salary less expense claims. Then when calculating amount payable, do you

A: (Total salary amount less expense claims) less taxable amount plus expense claims = amount due to you

OR

B: Total Salary less taxable amount plus expense claims = amount due to you

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TaxTimTaxTim says:
22 March 2016 at 12:59

Are you trying to work out your after tax amount, the tax owing or what you should be paid?


Leigh says:
22 March 2016 at 13:05

What you should be paid?

I will use simple figures to try explain my question.

Say I worked 160 hours at R350/hr = R56 000 (Total Salary)
I have the following expense claims:
Cell phone = R 100
Travel Km = R 2000

To calculate taxable amount I use (R 56 000 - R 100 - R 2000) = R 53 900
Assume this works out to R 15000 tax amount.

Now when working out amount due to me

is it A:

R 53 900 - R 15 000 + R 2100 = R 41 000

OR

B:

R 56 000 - R 15 000 + R 2100 = R 43 100


TaxTimTaxTim says:
22 March 2016 at 15:50

It would all depend on the way your earnings are structured. Please click our link to determine which segment of a an Independent Contractor? you fall into.

However if your company just pays you the hourly rate then they wouldnt deduct anything? Do you personally pay the expenses and then charge them for it? Are they withholding PAYE?


Leigh says:
22 March 2016 at 16:03

Hi, yes I will personally pay expenses and charge it to them.

They withhold PAYE.


TaxTimTaxTim says:
22 March 2016 at 16:10

Then you would need to take option B as per your example.


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