VHA Accounting Solutions

Employment income is generally taxed where the services are physically exercised. The place of contract conclusion, where the employer is based and where the remuneration is paid is irrelevant in determining the taxation of employment income. This principle is supported by South African legislation and case law.

Income earned from South African employers for services rendered in South Africa will be subject to South African employees’ tax. Employees’ tax refers to the amount of money that an employer who is a resident in South Africa deducts (or withholds) from an employee’s remuneration each month, which it pays over to SARS as partial payment of that employee’s annual tax liability. The amount is calculated according to the employee’s level of earnings using the applicable tax rate. The system where employees’ tax is deducted and accounted for monthly is also called Pay-As-You-Earn (“PAYE”).

The purpose of PAYE is to ensure that an employee’s income tax liability is settled while the income is earned. The advantage of this system is that the income tax liability for the year of assessment is settled over the course of the whole year of assessment. PAYE is therefore a withholding tax on employment income, which will be offset against the employee’s final income tax liability for the year of assessment.

The obligation to withhold PAYE on remuneration paid by an employer to its employees is regulated in the Fourth Schedule to the Income Tax Act No 58 of 1962. The Act, in this regard, omits to draw a distinction between residents and non-residents and simply emphasises the importance of an employer-employee relationship and the fact that the former has an obligation to pay the latter an amount that constitutes remuneration. Remuneration can be defined as any amount of income which is paid or is payable to an individual by way of any salary, bonus, gratuity payments, etc.

South African-sourced employment income that a non-resident of South Africa earns is subject to monthly employees’ tax if it is paid by an employer who is a tax resident in South Africa. Other income from a South African source is also subject to South African income tax and may be subject to provisional tax. Where the employer is not a resident of South Africa, employees’ tax must be deducted either by an agent or representative who has the authority to pay the remuneration to the non-resident employee.

The mere fact that an employee is a provisional taxpayer does not exempt an employer from its obligation to withhold employees’ tax on such an employee’s employment income. The only instance in which South African employers are absolved from withholding PAYE from an employee’s salary is where a non-tax resident derives employment income in respect of employment services rendered abroad.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Kashveer Mathura

Accounting Portfolio Manager

kashveer@vhaaccounting.com 078 882 9783

Adrian Surjoo

Quality Control Manager, SAICA

Credentials:

  • National Diploma in Cost and Management
  • Accounting
  • Advanced diploma in Accounting Sciences
  • Professional Accountant (S.A.)

Bongumusa Zondi

Director

Bongumusa Zondi, a senior accountant, blends business advisory with expertise in financial reporting and taxation. With just under a decade of experience in accounting and taxation, his career journey began by obtaining a National Diploma in Cost and Management Accounting and an Advanced Diploma in Accounting Sciences at the Durban University of Technology and University of South Africa, respectively. This was followed by a Junior Bookkeeper position at City Printing Works (Pty) Ltd. He began his SAIPA articles at Dobeyn Accounting Soultions and currently leads a dynamic accounting team and manages a sizeable portfolio of clients at VHA Accounting Solutions where he also completed his SAIPA Articles. Apart from assisting clients update their books and stay compliant with relevant authorities, he is fully interested in adding value through business advisory. Helping clients solve their financial problems and provide guidance on potential growth opportunities is his biggest passion. He has been driven by philosophies of teamwork and collaboration.

Notable achievements include qualifying as a Professional Accountant (S.A.) through SAIPA. Beyond the numbers, he enjoys watching sports, tutoring grade 12 learners, playing the piano and listening to classical music composed by Wolfgang Amadeus Mozart and George Frideric Handel, adding a well-rounded dimension to his professional life.

bongumusa@vhaaccounting.com 082 359 4536

Karishma Bhola

Director

The VHA Accounting Solutions team is excited to announce a new insurance service offering headed by Karishma Bhola. Karishma is an accredited financial advisor and has 18 years of experience in the finance industry and expertise in marketing/foreign exchange and business management. As a seasoned financial guru, she prides herself on delivering excellent client service every time.

Vidyanth Bhola

Director / CEO

Passionate about exceptional client service, Vidyanth Bhola serves a wide client base as an advisor and accountant.Vidyanth focuses on tax planning and estate and succession planning, which he approaches with enthusiasm for human relationships and a penchant for teamwork, to achieve outstanding results. In addition to being VHA Accounting Solutions Inc founder and as director of the Bhola group of companies, Vidyanth is involved on the board and advisory level with several non-profit organisations and other initiatives. Vidyanth obtained his BCom degree and H Tax Diploma from the University of South Africa after which he worked at Colenbrander Inc, as a Accounting Portfolio Manager. In 2018, Vidyanth found the accounting firm VHA Accounting Solutions Inc. Vidyanth is a family man and avid rugby fan. He enjoys learning about Aviation and flew a Boeing in the flight simulator in Dubai. Vidyanth also works on various charity organisations and is involved in various food drives. Vidyanth is a member of the South African Institute of Tax Professional (SAITA) and the Southern African Institute for Business Accountants (SAIBA).