In certain circumstances, employers of domestic workers are required to deduct Pay as Your Earn (“PAYE”) from a domestic worker’s salary in addition to UIF deductions. Once again, PAYE deductions must be reflected on the domestic worker’s payslip.
Employers are only required to deduct PAYE from employees who earn above the tax threshold prescribed by the South African Revenue Service (“SARS”) annually.[i]
The Tax Threshold Amount can be obtained from the tax tables published by SARS in February of each year. They are valid for the period from 1 March until 28 February of the following year. In respect of the taxable year 1 March 2021 to 28 February 2022, the tax threshold amount is as follows per annum:
By way of example, in 2021 if your domestic worker is under the age of 65 and his/her remuneration is less that R7 275.00 per month then he/she falls under the threshold and consequently there is no need to deduct PAYE.[ii]
In terms of Schedule 4 to the Income Tax Act, the following should be taken into account when determining a domestic worker’s remuneration:
Employers who engage full time domestic workers with benefits must therefore have due regard to the total remuneration earned by their employees in order to determine whether they should be deducting PAYE in addition to making UIF contributions.
Where a domestic worker’s remuneration is in excess of the threshold prescribed by SARS, the employer must register with SARS.
If an employer is required to deduct PAYE, this also has consequences for UIF payments. While the amount of the employee deduction and the employer contribution will remain unchanged, the UIF contribution will no longer be paid over to the UIF Commissioner (i.e. by way of uFiling) but rather to the SARS Commissioner (i.e. by way of eFiling) who will reimburse the UIF accordingly.
When calculating the amount of PAYE to be deducted, regard must be had to the deductions applicable in terms of the Income Tax Act including in respect of Pension Fund and Retirement Annuity Fund Contributions (if any).
A number of free and paid online tax calculators are available for the purposes of calculating the amount of PAYE / UIF payable. Two of the most common and useful are:
In the unlikely event that you are required to deduct PAYE in respect of your domestic worker and unsure of the amount to withhold, you may consider using the online tax calculators.
For a guide on registering new or existing domestic workers with SARS and effecting monthly UIF payments by way of ‘eFiling’ please click to see Chapter 7. For the SARS guide on registering for ‘eFiling’ click here.
[i] See chapter 3 of the Tax Administration Act and paragraph 15(3) of the Income Tax Act
[ii] See monthly tax deduction tables (1 March 2020 – 28 February 2021) published by SARS
