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PAYE/ Tax on Commissions

Posted 9 November 2015 under Tax Questions



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Kumi says:
5 November 2015 at 14:29

I am paying employees a monthly salary as well as commissions on top of the monthly basic. Do I have to deduct PAYE separately from monthly basic and then using a different PAYE/ Tax Rate for the commissions?

Commissions are available every month, however not every month has commissions paid to the employee. What would be the easiest and best way to understand this as well as being as SARS compliant

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TaxTimTaxTim says:
5 November 2015 at 14:47

You would use the same table, for those employees who do not have a tax directive, you would simply apply their monthly earnings including commission to the tax tables.


Kumi says:
9 November 2015 at 14:31

Hi, thanks for the response.

I have received a payslip for one of the guys who works for me from my accountant, in which she applies the PAYE tables for the Basic Salary of R7000 and then taxes the commission at 25%.

I was thinking that any second payment would be taxed at a higher rate - however this is paid together as a gross salary. I would have thought, as you indicated above, that the tax tables will be applied to the Basic Comms.


TaxTimTaxTim says:
9 November 2015 at 17:16

Commission could also be deducted at 25%, however this may result in you paying in tax at the end of the year, all depends on the total income for the year. Based on your basic being R7000, it does not appear this will happen though unless your commission for year exceeds R120 000 or so which means you will probably receive a refund at year end.


Kumi says:
9 November 2015 at 19:42

Hi. So in terms of the issued payslip; the basic must be added to the commission's and then apply the appropriate tax %?

Ideally I wouldn't want the people working for me to have extra to still cough up at year end.

I take it that this would be the best way to assist?


TaxTimTaxTim says:
9 November 2015 at 22:42

If you wanted to make sure they did not have to contribute at year end then yes that would be the best method. Or they need to apply for a tax directive and instruct you to take off a fixed percentage.


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