Category: PART II – Employees’ Tax

Paragraph 11 (Fourth Schedule) – Issue of directive by Commissioner

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11.    The Commissioner may, having regard to the circumstances of the case, issue a directive-

(a)     to an employer authorising that employer-

(i)      to refrain from deducting or withholding any amount under paragraph 2 by way of employees’ tax from any remuneration due to any employee of that employer; or

(ii)     to deduct or withhold by way of employees’ tax from any remuneration in terms of paragraph 2, a specified amount or an amount to be determined in accordance with a specified rate or scale,

in order to alleviate hardship to that employee due to circumstances outside the control of the employee or to correct any error in regard to the calculation of employees’ tax, or in the case of remuneration constituting commission or where the remuneration is paid or payable to a personal service provider and that directive must be complied with.

[Subparagraph (a) amended by section 42 of Act 20 of 2006, by section 69(1) of Act 60 of 2008 and by section 20 of Act 20 of 2022]

(b)       . . . . . .

[Paragraph 11 substituted by section 39 of Act 21 of 1995 and by section 84 of Act 45 of 2003. Sub-paragraph (b) deleted by section 9(1) of Act 16 of 2016 effective on 1 March, 2017 and applicable in respect of years of assessment commencing on or after that date]

Paragraph 11B (Fourth Schedule) – Standard Income Tax on Employees (SITE)

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STANDARD INCOME TAX ON EMPLOYEES



11B.    ……….

[Paragraph 11B inserted by section 41 of Act 90 of 1988, amended by section 22 of Act 70 of 1989, section 47 of Act 101 of 1990, section 46 of Act 129 of 1991, section 34 of Act 141 of 1992, section 3 of Act 168 of 1993, section 40 of Act 21 of 1995, section 35 of Act 36 of 1996, section 48 of Act 28 of 1997, section 53 of Act 30 of 1998, section 56 of Act 59 of 2000, section 33 of Act 30 of 2002, section 56 of Act 74 of 2002, section 22 of Act 16 of 2004, section 43 of Act 20 of 2006, section 2 of Act 8 of 2007, section 57 of Act 8 of 2007, section 1 of Act 3 of 2008,  section 44 of Act 3 of 2008, section 70 of Act 60 of 2008, section 20 of Act 8 of 2010, section 271 of Act 28 of 2011,  section 9 of Act 39 of 2013, repealed by section 10 of Act 23 of 2015 effective on 1 March 2016]

Paragraph 11C of Fourth Schedule – Deemed remuneration in respect of directors of private companies

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11C.     . . . . . .

[Paragraph 11C inserted by section 22(1) of Act 19 of 2001, amended by section 85(1) of Act 45 of 2003, by section 271 read with paragraph 83 of Schedule 1 of Act 28 of 2011, by section 10 of Act 39 of 2013 and by section 11 of Act 23 of 2015 and repealed by section 11(1) of Act 16 of 2016 effective on 1 March, 2017 and applicable in respect of years of assessment commencing on or after that date]

12.       . . . . . .

Paragraph 13 (Fourth Schedule) – Furnishing and obtaining of employees’ tax certificates

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13.       FURNISHING AND OBTAINING OF EMPLOYEES’ TAX CERTIFICATES

(1)     Subject to the provisions of paragraphs 5, 14(5) and 28, every employer who, during any period contemplated in subparagraph (1A), deducts or withholds any amount by way of employees’ tax as required by paragraph 2 shall, within the time allowed by subparagraph (2) of this paragraph, deliver to each employee or former employee to whom remuneration has during the period in question been paid or become due by such employer, an employees’ tax certificate in such form as the Commissioner may prescribe or approve, which shall show the total remuneration of such employee or former employee and the sum of the amounts of employees’ tax deducted or withheld by such employer from such remuneration during the said period, excluding any amount of remuneration or employees’ tax included in any other employees’ tax certificate issued by such employer, unless such other certificate has been cancelled by such employer.

[Subparagraph (1) amended by section 24(a) of Act 72 of 1963 and substituted by section 49(a) of Act 101 of 1990, by section 23(1) of Act 19 of 2001, by section 12(a) of Act 23 of 2015 and by section 7(a) of Act 24 of 2020]

(1A)  The period referred to in subparagraph (1) shall be the period of 12 months ending on the last day of February of any year or, at the option of the employer which may be exercised by him in relation to all his employees or any class of his employees, the period, whether of 12 months or not (to be known as an alternate period), commencing on the day following the last day of the preceding alternate period in relation to the employer and ending on a date falling not more than 14 days (or such greater number of days as the Commissioner having regard to the circumstances of the case may allow) before or after the last day of February of any year.

(1B)   Where any employer has in relation to any employee exercised an option as contemplated in subparagraph (1A), any remuneration which is paid or becomes payable to the employee by the employer during an alternate period shall for the purposes of this Act be deemed to have been paid or to have become payable to the employee during the year of assessment ended on the last day of February of the calendar year in which such alternate period ended.

(2)  The employees’ tax certificate referred to in sub–paragraph (1) shall be delivered –

 

(a)     if the employer who is required to deliver the certificate has not ceased to be an employer in relation to the employee concerned, within 60 days after the end of the period to which the certificate relates;

 

(b)     if the said employer has ceased to be an employer in relation to the employee concerned but has continued to be an employer in relation to other employees, within fourteen days of the date on which he has so ceased; or

 

(c)     if the said employer has ceased to be an employer, within 14 days of the date on which the employer has so ceased,

[Item (c) amended by section 24 of Act 72 of 1963 and substituted by section 12 of Act 23 of 2015 effective on 8 January 2016]

(3)     For the purposes of sub–paragraph (2) an employer shall, if the Commissioner having regard to the circumstances of the case so directs be deemed not to have ceased to be an employer in relation to any of his casual employees who is likely from time to time to be re–employed by such employer.

(4)     Notwithstanding the provisions of subparagraphs (1) and (2), any employer who has deducted or withheld employees’ tax from the remuneration of any employee shall, as and when required by the Commissioner, deliver to such employee an employees’ tax certificate in such form as the Commissioner may prescribe or approve, which shall show the total remuneration of such employee or former employee and the sum of the amounts of employees’ tax deducted or withheld by such employer from such remuneration during any period specified by the Commissioner, but excluding any amount of remuneration or employees’ tax included in any other employees’ tax certificate issued by such employer, unless such other certificate has been cancelled by such employer.

[Subparagraph (4) amended by section 24(a) of Act 72 of 1963 and substituted by section 7(b) of Act 24 of 2020]

(5)     It shall be the duty of any employee or former employee who has not received an employees’ tax certificate within the time allowed by sub–paragraph (2) forthwith to apply to the employer for such certificate.

(6)     ……….

(7)     It shall be sufficient compliance with the provisions of sub–paragraph (1) or (4) in regard to the delivery of any employee’s tax certificate to any employee or former employee if such certificate is delivered to the employees’ authorized agent or the representative taxpayer in respect of the remuneration shown in such certificate or, where delivery cannot conveniently be effected by personal delivery, if such certificate is sent to the employee or former employee or such agent or representative taxpayer.

(8)      . . . . . .

[Subparagraph (8) deleted by section 7(c) of Act 24 of 2020]

(9)      . . . . . .

[Subparagraph (9) deleted by section 7(c) of Act 24 of 2020]

(10)     . . . . . .

[Subparagraph (10) deleted by section 7(c) of Act 24 of 2020]

(11)     . . . . . .

[Subparagraph (11) deleted by section 7(c) of Act 24 of 2020]

(12)   ………..

(13)    . . . . . .

[Subparagraph (13) deleted by section 7(c) of Act 24 of 2020]

(14)     . . . . . .

[Subparagraph (14) deleted by section 7(c) of Act 24 of 2020]

(15)   For the purposes of this Schedule, any employees’ tax certificate on which appears the name or any trade name of any employer shall, until the contrary is proved, be deemed to have been issued by such employer if such certificate is in a form prescribed by the Commissioner.

[Subparagraph (15) amended by section 24(b) of Act 72 of 1963 and substituted by section 7(d) of Act 24 of 2020]

Paragraph 2 (Fourth Schedule) – Employers to deduct tax

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2.    EMPLOYERS TO DEDUCT TAX

(1)    Every-

(a)     employer that is a resident; or

(b)     employer that is not a resident and conducts business through a permanent establishment in the Republic; or

(c)     representative employer,

(whether or not registered as an employer under paragraph 15) who pays or becomes liable to pay any amount by way of remuneration to any employee shall, unless the Commissioner has granted authority to the contrary, deduct or withhold from that amount, or, where that amount constitutes any lump sum contemplated in paragraph 2(1)(b) of the Second Schedule, deduct from the employee’s benefit or minimum individual reserve as contemplated in that paragraph, by way of employees’ tax an amount which shall be determined as provided in paragraph 9, 10 or 11 or section 95 of the Tax Administration Act, whichever is applicable, in respect of the liability for normal tax of that employee, or, if such remuneration is paid or payable to an employee who is married and such remuneration is under the provisions of section 7(2) of this Act deemed to be income of the employee’s spouse, in respect of such liability of that spouse, and shall, subject to the Employment Tax Incentive Act, 2013, pay the amount so deducted or withheld to the Commissioner within seven days after the end of the month during which the amount was deducted or withheld, or in the case of a person who ceases to be an employer before the end of such month, within seven days after the day on which that person ceased to be an employer, or in either case within such further period as the Commissioner may approve.

[Subparagraph (1) amended by section 23(a) of Act 72 of 1963, substituted by section 29(1)(a) of Act 55 of 1966, by section 38 of Act 88 of 1971, by section 45(a) of Act 129 of 1991, by section 54 of Act 59 of 2000, amended by section 65(1) of Act 35 of 2007, by section 18(1)(a) of Act 18 of 2009 and by section 13 of Act 26 of 2013 and substituted by section 6(1)(a) of Act 16 of 2016 and by section 13(a) of Act 18 of 2023]

(1A)  Notwithstanding the provisions of subparagraph (1), a person shall not be required to deduct or withhold employee’s tax in respect of any year of assessment of a company or trust solely by virtue of paragraph (c) of the definition of ‘personal service provider’ where the company or trust has in respect of such year of assessment provided that person with an affidavit or solemn declaration stating that the relevant paragraph does not apply and that person relied on that affidavit or declaration in good faith.

(1B)   Notwithstanding the provisions of subparagraph (1), a person shall deduct or withhold employees’ tax in respect of any amount payable in respect of variable remuneration, as defined in section 7B(1), on the date on which the amount is paid to the employee by the employer as contemplated in section 7B(2).

(2)     Any employer may, at the written request of any employee, deduct or withhold from any amount of remuneration an amount by way of employees’ tax greater than that required to be deducted or withheld in terms of sub–paragraph (1), and shall remit such amount to the Commissioner, and the provisions of this Schedule relating to employees’ tax shall mutatis mutandis apply in respect of such amount.

(2A)   An employer may deduct the amount of the employment tax incentive for which the employer is eligible in terms of the Employment Tax Incentive Act, 2013, from the amount of the employees’ tax to be paid to the Commissioner by that employer in terms of subparagraph (1), unless section 8 of that Act applies.

(2B)  Notwithstanding the provisions of subparagraph (1), a person that pays an annuity and is a pension fund, pension preservation fund, provident fund, provident preservation fund, retirement annuity fund or is licensed as an insurer under the Insurance Act shall, when deducting or withholding employees’ tax in respect of any year of assessment, apply the fixed tax rate that the Commissioner directs must be used in determining the amount of employees’ tax to be withheld, where the person to whom that annuity is paid receives an amount of remuneration from more than one employer.

[Subparagraph (2B) added by section 51(1) of Act 34 of 2019 effective on 1 March, 2022 (effective date in section 51(2) of Act 34 of 2019 as substituted by section 79(1) of Act 23 of 2020) and substituted by section 37(1) of Act 20 of 2021 effective on 1 March, 2022]

(2C)  A pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund that pays a “savings withdrawal benefit” as defined in section 1 shall, when deducting or withholding employees’ tax in respect of that savings withdrawal benefit, apply the fixed tax rate that the Commissioner directs must be used in determining the amount of employees’ tax to be withheld.

[Subparagraph (2C) added by section 6(1) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]


(3)     ……….

(4)     The amount required to be deducted or withheld from any remuneration under this Schedule by way of employees’ tax must be calculated on the balance of the remuneration remaining after deducting therefrom-

(a)     any contribution by the employee concerned to any pension fund or provident fund which the employer is entitled or required to deduct from that remuneration, but limited to the deduction to which the employee is entitled under section 11F having regard to the remuneration and the period in respect of which it is payable;

[Item (a) substituted by section 18 of Act 18 of 2009 and section 8 of Act 39 of 2013 effective on 1 March 2016 (Date of operation in section 8 of Act 39 of 2013 as substituted by section 68 of Act 44 of 2014) and section 66 of Act 17 of 2017 effective on 1 March 2016]

(b)     at the option of the employer, any contribution to a retirement annuity fund by the employee in respect of which proof of payment has been furnished to the employer, but limited to the deduction to which the employee is entitled under section 11F having regard to the remuneration and the period in respect of which it is payable;

[Paragraph (b) substituted by section 8 of Act 39 of 2013 effective on 1 March 2016 – comes into operation in terms of section 8 of Act 39 of 2013 as substituted by section 68 of Act 44 of 2014 and section 66 of Act 17 of 2017 effective on 1 March 2016]

(bA)  any contribution made or amount paid by the employer to any retirement annuity fund on behalf of or for the benefit of the employee, but limited to the deduction to which the employee is entitled under section 11F having regard to the remuneration and the period in respect of which it is payable;

[Item (bA) inserted by section 18 of Act 18 of 2009 and substituted by section 8 of Act 39 of 2013 effective on 1 March 2016 (Date of operation in section 8 of Act 39 of 2013 as substituted by section 68 of Act 44 of 2014), section 66 of Act 17 of 2017 and section 67 of Act 23 of 2018 effective on 1 March 2018]

 

(c)       . . . . . .

[Item (c) amended by section 50(1)(a) of Act 31 of 2005 and deleted by section 8(1)(b) of Act 39 of 2013 effective on 1 March, 2015 and applicable in respect of premiums paid on or after that date]

(cA)     . . . . . .

[Item (cA) inserted by section 94(1)(a) of Act 24 of 2011 repealed by section 92 of Act 21 of 2012) and deleted by section 8(1)(b) of Act 39 of 2013 effective on 1 March, 2015 and applicable in respect of premiums paid on or after that date]

 

(d)     ……….

 

(e)     ……….

 

(f)      so much of any donation made by the employer on behalf of the employee—

(i)      as does not exceed 5 per cent of that remuneration after deducting therefrom the amounts contemplated in items (a), (b) and (bA); and

[Sub-item (i) substituted by section 94(1)(c) of Act 24 of 2011, by section 19(1)(c) of Act 21 of 2012 and by section 6(1)(b) of Act 16 of 2016 deemed effective on 1 March, 2015 and applicable in respect of donations paid on or after that date]

 

(ii)     for which the employer will be issued a receipt as contemplated in section 18A(2)(a).

: Provided that at any time during the year of assessment the amount of the contribution to be deducted in terms of paragraphs (a), (b) and (bA) must not exceed an amount that bears to the amount stipulated in section 11F(2)(a) the same ratio as the period during which remuneration was paid by an employer to the employee bears to a whole year.

[Proviso to subparagraph (4) added by section 9 of Act 13 of 2017 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]

(5)

(a)     The Commissioner shall on application made to him by any person who is a labour broker or who is an employee by reason of the provisions of paragraph (d) of the definition of “employee” in paragraph 1, issue to such person a certificate of exemption if –

 

(i)      such person carries on an independent trade and is registered as a provisional taxpayer under the provisions of paragraph 17;

 

(ii)     in the case of any such labour broker, he is registered as an employer under the provisions of paragraph 15; and

 

(iii)    such person has, subject to any extension granted by the Commissioner, submitted all such returns as are required to be submitted by him under this Act:

 

Provided that the Commissioner shall not issue a certificate of exemption if-

 

(aa)   more than 80 per cent of the gross income of such person during the year of assessment consists of, or is likely to consist of, an amount or amounts received from any one client of such person, or any associated institution as defined in the Seventh Schedule to this Act in relation to such client unless that person is a labour broker who throughout the year of assessment employs three or more full-time employees-

 

(A)    who are on a full-time basis engaged in the business of that labour broker of providing persons to or procuring persons for clients of that labour broker; and

 

(B)    who are not connected persons in relation to that labour broker;

 

(bb)   such labour broker provides to any of its clients the services of any other labour broker; or

 

(cc)   such labour broker is contractually obliged to provide a specified employee of such labour broker to render any service to such client.

 

(b)     The certificate of exemption referred to in item (a) shall be issued in such form as the Commissioner may decide and shall be valid for such period as the Commissioner may indicate thereon.

 

(c)     An employer shall not be required to deduct or withhold employees’ tax from any remuneration paid or payable by the employer to any person who produces to the employer a valid certificate of exemption issued by the Commissioner under item (a).

[Subparagraph (5) added by section 45 of Act 101 of 1990. Item (c) substituted by section 13(b) of Act 18 of 2023]

(6)     Any amount included in gross income in terms of paragraph (eA) of the definition of “gross income” shall for the purposes of this Schedule be deemed to be an amount which an employer pays or becomes liable to pay by way of remuneration to an employee.