The Practical Tax Loose Leaf Service explains that payments received in a particular period, for a longer period (such as a 13th bonus cheque) must be pro-rated according to the gross salary average.
You can then include these amounts in the remuneration calculation.
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Follow these two steps to calculate the 13th cheque amount
Step #1: Divide the 'normal' amount paid as 13th cheque into 12.
Step #2: Based on this amount, pro-rate your employee's payment on the amount of completed months he's worked in that year/financial year/period directly after the last payment of the 13th cheque.
Here's an example of how to calculate the 13th cheque amount:
Tim works for ABC Inc. He gets a 13th cheque from his employer, at the end of December. His gross average salary is calculated as follows:
Usual/Normal amount 13th Cheque: R10 000 / 12 = R833
Tim has given notice that he's resigned, effective end of March. He'll complete three months of work. So the gross average salary is R833 x 3 = R2 500
Note: The 13th cheque amount can also be calculated as a percentage of your employee's monthly salary, multiplied by the number of months he completed at your company.
Don't forget that any discretionary payments that aren't related to an employee's hours of work or performance must be excluded from remuneration.
On the other hand, any non-discretionary payments (such as a 13th cheque), which are directly related to an employee's hours of work or performance and which are paid for a longer period, must be included in remuneration.
Now that you know how to calculate the 13th cheque amount, make sure you comply.
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