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PAYE regulation regarding 'unpaid salaries'.

Posted 23 October 2014

As a shareholder/director of a PTY, if I received "unpaid salary" that then accumulates in a loan account, would I still be require to pay PAYE, even if no income as such is received?

TaxTim Marc TaxTim Marc said:
23 October 2014 at 14:46

Did you record it as a loan or a salary on your books?

Jamii said:
23 October 2014 at 15:20

It has gone into the director loan account since it's my 'unpaid' or equity contribution to the company.
Not entirely sure how it has been entered.

Would you give me the scenario for each, unpaid vs loan?

Thx

TaxTim Marc TaxTim Marc said:
24 October 2014 at 7:27

The directors' loan needs to be repaid within 12 months or it is seen to be a deemed dividend. In order to avoid this you need to charge a normal market related SARS approved interest rate each year.

Otherwise if it has been recorded as a salary, although unpaid, then it needs to attract PAYE.

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