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PAYE or Provisional Tax

Posted 18 March 2016 under Tax Questions



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Meg says:
17 March 2016 at 11:53

I own a small business - registered with CIPC as a private company. I am the sole director of this company and currently get paid a salary by the company. Should I be registered for PAYE, UIF and WCA for the income in the form of the salary or are provisional tax payments sufficient.

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TaxTimTaxTim says:
17 March 2016 at 12:11

As a company director, you are deemed to be an employee and your company is the employer.
This means your company should be registered for PAYE and UIF and this should be deducted from your salary each month and paid to SARS. Your company should also be registered as a provisional taxpayer and be paying tax twice a year on its profits.

In your personal capacity, you only need to be registered as a provisional taxpayer if you earn income other than the salary from your company.
Am I a Provisional taxpayer?


Meg says:
17 March 2016 at 13:13

Can you please expand out your comment "This means your company should be registered"?
Is it a legal requirement for a company to be registered for PAYE and UIF?
What SARS regulation deems that I must register and is there a criteria for registering?

Thanks for your help!!


TaxTimTaxTim says:
18 March 2016 at 12:22

Yes, it is a legal requirement for a private company to be registered for PAYE and UIF if it is paying a salary to employees/Directors. This is set out in the Income Tax Act (4th schedule part 2, 11C) where it specifically refers to "remuneration" paid to Directors of private companies and the requirement to deduct employees tax (PAYE).


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