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Independent contractors - liable for employee tax?

Posted 9 January 2016 under Tax Questions



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Karen says:
7 January 2016 at 14:07

We have several independent contractors who we pay regularly each month (R7k). (1) Is employee tax relevant in this instance? (2) If so, do we do deductions before paying them?

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TaxTimTaxTim says:
7 January 2016 at 19:52

If they are true "independent contractors" you would pay them the full amount and they would be responsible for their own taxes.

If they are more likely to be perceived as "employees" then you would need to deduct PAYE before paying them their salary.

What is the nature of their work? Do they work full time at your premises?


Karen says:
8 January 2016 at 11:14

The Independent Contractors work as TeleStars for us (telemarketers) from their home office. We all work virtually. They work on average 4 hours a day, at their own pace, 5 days per work, all in office hours.


TaxTimTaxTim says:
8 January 2016 at 13:16

Do you know if they have other clients?


Karen says:
8 January 2016 at 13:40

We are their only client at this stage.


TaxTimTaxTim says:
9 January 2016 at 16:15

The issue of whether you should deduct tax is not entirely clear cut. However, based on the details given, it would probably be best to deduct PAYE and UIF for them.

Please make use of our SARS income tax calculator to see the PAYE and UIF you should deduct.


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