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Tax on bonus from my employer

Posted 10 March 2016 under Tax Questions

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Zane says:
8 March 2016 at 18:12

Hi, can you please clarify if there is a specific tax rate percentage charged on BONUS PAYMENTS by employers? Last year it seemed to be exactly 36% that was deducted for tax, this year (to Feb 2017) I'm not sure what rate is applied.

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TaxTimTaxTim says:
9 March 2016 at 10:03

Your bonus payment would be added to your salary and taxed at your marginal rate of tax per the normal tax tables. There is no special rate for bonuses - it will be taxed the same way as your salary.

Please make use of our SARS income tax calculator to work out tax due on your annual salary plus bonus.

Zane says:
9 March 2016 at 12:23

Thank you.
Your response is a bit confusing though.
From what I have tried to find out so far, the way to work out the immediate tax charged on bonuses is as follows (please correct if I am wrong!):
If one is paid a R15 000 bonus in a month, SARS will calculate that R15 000 x 12 = R180 000, which puts one in the 18% bracket and a straight 18% tax is then deducted in that month.
The tax brackets, however include a deductible amount in each bracket to work out the effective tax rate one would pay, which would differ from the above.
What this means to me then is that the smaller your bonus, the less the tax and the TAX RATE?

TaxTimTaxTim says:
10 March 2016 at 9:26

You are correct - tax is calculated by grossing up the monthly amount to an annual amount, apply percentage per the tax tables and deduct the primary rebate.

You can calculate the tax due for the year by adding up 12 months of salary plus your bonus and then working out per the tax tables.

The payment of a bonus may result in you overpaying tax in a month, in which case you can claim a tax refund when you submit your tax return.

Individuals are taxed on a sliding scale from 18% to 41% so you are correct in saying that the more you earn, the more tax you will pay as you move into higher tax brackets.

Hope this makes sense!

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