PAYE Explained
How PAYE is calculated on the year-to-date averaging basis.
Year-to-date basis
PAYE is not calculated on the current month in isolation. The system annualises year-to-date remuneration, applies the SARS tax tables and rebates, then subtracts tax already deducted. This is why a bonus month shows higher tax and later months self-correct.
Rebates and thresholds
Primary, secondary (65+) and tertiary (75+) rebates are applied based on date of birth. Employees below the tax threshold pay no PAYE.
Medical tax credits
Medical scheme fees tax credits reduce PAYE for the main member and dependants where the employer administers the scheme.
Directives
Where SARS issues a directive — fixed percentage, fixed amount or lump sum — capture it on the employee and it overrides the standard calculation.
Use the free PAYE calculator to sanity-check a single employee.