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Beware 'normal tax': Paying it isn't as simple as you think

by , 31 October 2014
The basis of normal tax is the gross income you accrue during a specified period. You might think this is the most straight-forward form of all the taxes to pay, but this isn't the case.

Normal tax, whether it's yours or your employees, still affects you and getting it wrong could have serious consequences.

That's why today, we're explaining how normal tax works, so you always get it right...


Ensure you get the normal tax process right to avoid issues with SARS

SARS levies normal tax on anyone's works as a resident or deemed to be resident in the Republic. This applies to individuals, juristic persons, (such as companies or close corporations) and other legal persons (such as trusts, the estates of deceased persons) or a body of persons (such as a club or association). 
The first thing you need to watch out for is the process of how you get to your normal tax. Normal income becomes gross income when you deduct any exempt income. You then reduce this to taxable income after deducting allowable deductions and adding any taxable capital gains. 
Here's how you need to handle your normal tax.
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Here's what you need to do to do pay your normal tax

Calculate your company's normal tax at a fixed rate on taxable income. In the case of an individual, estates, certain testamentary trusts and special trusts, the normal tax calculation is a progressive rate on taxable income.
SARS collects normal tax, in respect of remuneration, according to the SITE (Standard Income Tax on
Employees) and PAYE (Pay-as-you-earn) systems. 
In other words, as the employer, you deduct the taxes from your employees' salaries and pay it over to SARS.
In the case of business profits, SARS collects the tax annually in the form of provisional tax.
So ensure you pay your company's normal tax correctly and handle your employees' tax properly to ensure you don't make any mistakes.
Check out the Practical Tax Loose Leaf Service for more information on the different forms of tax your company needs to pay and how to do this correctly.

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