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How do I calculate my earnings after tax? Try our income tax calculator

Posted 6 June 2012

Most employees negotiate their salary based on the gross amount (or cost to company) - the whole amount paid by their employer. Since income tax is deducted from this gross amount, in most cases the taxpayer doesn't know how much money actually goes into their bank account each month, after tax.

SARS levies employee's tax monthly and employers must pay that over to SARS every month. This tax is called PAYE (Pay As You Earn). PAYE is calculated based on your taxable income. This is different to your gross income and is calculated as follows:

Taxable income = Gross income - (highest of either 7.5% of pension contribution or R1750) - 20% of travel allowance

Sometimes your gross salary includes a pension fund contribution (for when you retire) and a travel allowance too (to help you pay for work-related transport). Only 80% of your travel allowance is included in taxable income, thus we subtract 20% to calculate this value. Pension fund contributions aren't taxed in their entirety either, so deductions are limited to the highest of 7.5%, R1 750 or the actual amount.

Once you know what your taxable income is, you need to consult the SARS tax tables to find the income tax bracket that you fit into i.e. your tax rate. People have different tax rates based on how much they earn, so higher earners fall into higher income tax brackets than lower income earners. It also depends on whether you are paid weekly, every two weeks, every month or year.

You can do the above calculation on your own and search the SARS website for these tax tables, or simply consult our easy income tax calculator that does all the hard stuff for you. Try it today and see how much money is actually arriving in your bank account!

RidwaanR says:
3 July 2012 at 16:02

Hi,

Can I claim for insurance that I pay on my vehicle?
Can I also claim for excess payments for accident repair to my vehicle as a maintenance cost?

Brilliant site - sent the groupon to about a million people this morning :-)

Thanks

TaxTim TaxTim says:
3 July 2012 at 17:43

Hi Ridwaan,

Firstly thank you very much for the thumbs up and for the promotion of our site:) That is our aim, trying to help everyone be able to complete and most importantly understand their own tax return.

Unfortunately you cannot claim the excess payments nor insurance unless these payments unless you receive a travel allowance or a work car to use. You can also claim if you run your own business and you use the car for work. If you are just a salaried employee and you have no travel allowance and don't use a company provided car then you are limited in what you can claim.

Does that answer the question?

Regards,
Tim

Bobby says:
10 October 2012 at 14:59

As part of my Cost to Company Package, I am currently contributing 17.5% to my pension fund. 10% is my portion and the 7.5% is reflected as my company portion. How much of this can I claim back at the end of the year?

TaxTim TaxTim says:
10 October 2012 at 17:26

Hi Bobby,

You are only allowed to claim 7.5% of your gross income (relating to retirement) as a pension fund deduction. You can carry a portion over to the next year, but if your contribution hasn't changed each year then you won't be able to do this. It is limited to the 7.5% unfortunately per annum.

Regards,
Tim

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