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Unpacking the seemingly complex: Part-time and Casual Workers

Unpacking the seemingly complex

Posted 22 August 2017


One of the most often-misunderstood things is how tax on part-time and casual workers actually gets calculated. A topic often sparking a lot of debate, causing confusion too. A lot of people are taking on more than one job- if that isn’t already their only job- others opting for the part-time or casual work positions. Initially, whether you’re working as a full or part time employee you’re inclined to pay tax, SARS has noted out points which one should follow

SARS prescribes that part time and casual workers who work less than 22 hours a week must be taxed at 25%. This is because there’s an assumption that the worker earns income from other sources during the rest of their day when they are not performing their part time job. However, if they can prove to their employer that they don’t work for anybody else, or should they start to work more than 22 hours per week, then tax should be deducted per the normal tax tables as if they were in full time employment.

Students who earn extra income (for example, by working as a waiter or tutor) are often unfamiliar with the tax rates and the fact that they may in fact be overpaying tax. They may simply accept the tax withheld as an unwelcome cost of their employment without realising that they may be able to claim some (or all) of it back from SARS if they were to submit a tax return.

Let’s look at an example.

David is studying part time through UNISA. He also works 20 hours a week as a tutor at the University of Cape Town (UCT). He earns a gross salary of R10,000 per month and receives R7,500 after tax. Since he is a part time employee, who works less than 22 hours per week, UCT withholds PAYE at the SARS prescribed rate of 25%. David has no other source of income and does not submit a tax return.

Firstly, we will calculate the amount of tax that David should be paying on a salary of R120,000 per year:

Applying the tax tables for tax year 2018:
18% X R120,000 = R21,600
Less: primary rebate: (R13,635)
Total annual tax liability R 7,965

Monthly PAYE = R7,965 / 12 = R663,75.

Take home pay should be R10,000 – R663.75 = R9,336.25.
This is R1,836.25 more than his actual monthly take home salary.

You can also use the handy calculator on TaxTim’s website to calculate the tax due on a monthly salary of R10,000.

Secondly, let’s compare his actual tax liability to what he has paid to SARS for the year:

Total PAYE withheld = R2,500 X 12 = R30,000

Therefore, if he were to submit a tax return he'd be able to claim a tax refund of R22,035 (R30,000 – R7,965).

Since David didn't work for anyone else, if he'd been aware of the tax rules for part time workers, he could've asked his employer to deduct PAYE using the normal tax tables as if he was in standard employment.

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