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3. Payroll process

Overview

A taxpayer’s taxable income is assessed after the end of the year of assessment when the taxpayer submits an income tax return. The taxpayer’s income tax liability is calculated from his/her assessed taxable income for the relevant year of assessment. The calculated income tax liability might not be the amount payable by or refundable to the taxpayer. All provisional tax payments and employees’ tax (also referred to as Pay-As-You-Earn (“PAYE”)) payments made during the applicable year of assessment by the taxpayer are deducted from the taxpayer’s calculated income tax liability to determine the amount payable by, or refundable to, the taxpayer.

SARS needs to ensure that it will receive the amount of tax that it is due to receive. SARS knows that a lot of people have the tendency to spend every Rand of income they receive, which might result in a significant cashflow problem for a taxpayer if that taxpayer only pays his/her tax after the assessment of his/her tax return. As a result, SARS introduced provisional tax and employees’ tax, which are mechanisms that allow a taxpayer to prepay his/her taxes.

In this study guide, we will introduce you to the basic concepts regarding provisional tax and the IRP6 return. In the next study unit, IPPT.02 Calculation, you will learn more about how to calculate the estimate that should be used in the first and second provisional tax returns.

Short course content (self-paced) 

This subtopic cover:

• Payroll Process (PP)
  • Introduction to the payroll process
    • Payroll Processing Introduction
    • Payroll process Input
    • Payroll Closing Dates
    • Payroll Process New and Terminated Employees
    • Payroll Process Financial Information
    • Payroll Process Reconciliation

Competencies developed in this short course (self-paced)

After studying this short course, you should be able to:

• Understand the importance and nature of employment taxation including the employer’s obligations.
• Determine the requirements to qualify as an employee and employer.
• Understand the basic recurring forms of remuneration and benefits for taxation.
• Identify the Skills Development Levy, Unemployment Insurance Fund Contributions and the basic tax calculations.