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PAYE vs Provisional Tax

Posted 7 March 2016 under Tax Questions



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Mark says:
29 February 2016 at 13:40

I have a permanent job which caters for roughly 65% (660k) of my total gross income the other 35% (335k) is obtained by a business I run. Should I apply for provision tax and should my company be paying PAYE for me or should I be paying two payments as a provisional tax payer? How do I go about this if it is the case?

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TaxTimTaxTim says:
1 March 2016 at 10:03

Since you run a business, you should register for provisional tax. This can be done on SARS eFiling. Please read our blog on What is Provisional Tax? How and when?
Am I a Provisional taxpayer?

Your company should be deducting monthly PAYE from your salary and paying to SARS. In addition, you should complete two provisional tax returns per year (August and Feb) in order to pay tax on your business income.

Let TaxTim assist you with your provisional filings and Tax Return!


Mark says:
1 March 2016 at 10:06

Thank you very much, could I not register for Provisional Tax and only pay one amount on my total earnings as I run the business as a sole trader? Does it matter?


TaxTimTaxTim says:
2 March 2016 at 10:27

If you work more than 22 hours a week for one employer, at their premises and are under their supervision and control, you are essentially an "employee" and your employer has a legal obligation to withhold employee's tax (PAYE).

Therefore, it depends very much on the nature of your permanent job and your arrangement with your employer.


Mark says:
2 March 2016 at 10:29

I work - 45 hours a week, I do not work for the company I am employed by directly, I rarely visit the offices and do not directly report to anyone at the company. I am a contractor who works at various client sites. I am contracted to company X which then contracts my services to various other companies.


TaxTimTaxTim says:
3 March 2016 at 9:49

Do you have your own employees?
Are you free to build your own client base and take on other clients if you wish? (it sounds like you might be doing this already).
Do you use your own tools equipment or that belonging to Company X?


Mark says:
3 March 2016 at 10:02

I do have two of my own employees who receive a salary each month, as I run my own business I have my own clients. I use all my own equipment, laptops, vehicles, etc.


TaxTimTaxTim says:
4 March 2016 at 12:19

Is Company X a Labour Broker?


Mark says:
4 March 2016 at 13:22

No they are not a labor broker, I am an independent contacted for company x and provide various services to them for different clients.


TaxTimTaxTim says:
7 March 2016 at 9:56

Based on the information you have provided, it sounds like you should pay provisional tax on both income sources.
This would mean however, that you would need to invoice Company X who should pay you a gross amount and then you would be responsible for your own taxes on all your income.


Mark says:
7 March 2016 at 10:02

Thank you so much for your help, you have helped a great deal. I will definitely be in touch to use your services.


TaxTimTaxTim says:
7 March 2016 at 10:04

Only a pleasure - thanks for the positive feedback!


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