Notes about South African Revenue Service and how Independent Contractors are taxed
When are you an independent contractor according to SARS?
Do you earn more than 80% of your income from this one company?
Do you get paid the same amount every time and do you receive it at regular intervals, for example weekly or monthly?
Do you work mainly from the company’s offices?
Do you have a boss at the company who checks up on you and tells you what your working hours are, and when you are allowed to take leave?
Do you (or will you) receive any benefits from the company that you work for, for example a company car, cellphone or training?
If you answered “yes” to each of the first four questions, Sars will consider you an employee of the company and not an independent contractor.
You ARE an Independent Contractor. You should have no PAYE (employee’s tax) deducted from your income. You need to register for Provisional Tax and you should be responsible for your own tax affairs. Make use of the Local Business Income section of your ITR12 to declare your incomes/expenses.
You are an Independent Contractor, BUT SARS will want your employer to deduct PAYE (employee’s tax) at 25%. Your income must be coded to 3616 on your IRP5. You may deduct your business related expenses.
You are NOT an Independent Contractor. Your employer should be deducting PAYE (employee’s tax) from you every month based on the normal tax tables.
Provisional taxpayers are people who earn income other than a salary / remuneration.