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Tax on bonus

Posted 28 January 2016 under Tax Questions



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Letitia says:
28 January 2016 at 15:49

I got a performance bonus in December last year. This was paid separate from my salary. I first received my salary then few days later a performance bonus. I have now received my payslip and when I saw that there was a huge difference on my normal salary I was told that payroll deducted tax from the bonus of December from my January salary. Can you please advise if this is legal?

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TaxTimTaxTim says:
28 January 2016 at 15:51

When did you get paid the bonus?


Letitia says:
28 January 2016 at 15:54

I got paid my december salary the 22 december 2015 and the bonus the 31 december 2015 (which I was not aware that I was getting). They deducted the tax from the bonus on my january 2016 salary.


TaxTimTaxTim says:
28 January 2016 at 15:56

You should have PAYE deducted on the bonus in the month received - because they paid you already on 22 December then they could not go back to December and do this so they taxed you in January despite being paid in December. However the month difference will not affect your PAYE amount.


Letitia says:
28 January 2016 at 16:07

Are you saying they should have deducted it in December and not my January salary? If so can I fight this?


TaxTimTaxTim says:
28 January 2016 at 16:21

SARS says that bonuses are taxed when paid so in theory it should be taxed in December, not January as it was paid in December. Your employer will argue that payroll was already done. When did they actually pay it - was it not 1 January?

Why are you wanting to fight this? The amounts would be the same regardless.


Letitia says:
28 January 2016 at 16:31

I received the bonus on the 31 December. My pay slip for Jan shows my salary and bonus but it was received in December not in January. The PAYE is a whole 950 extra than normal. Are you saying regardless of when it was paid they can just take off the PAYE when they want to?


TaxTimTaxTim says:
28 January 2016 at 22:20

The PAYE will be calculated exactly the same way whenever the bonus was paid - so whether they added it to your December payslip or January payslip it would still have the same amount of extra tax deducted. It appears that because your employer had already produced the payslip in December and paid SARS the PAYE that they included it in January. The remedy would be for them to take it off your January payslip and put it on your December one, but the tax would be the same and you would still have the extra amount taken off. Either way you would pay tax which would be the same.


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