Most employees do not understand the complex tax calculations the payroll team applies to their monthly earnings and often inundate them and Human Resources with questions about their deductions. The many tax myths shared by and amongst employees and professionals alike only fuel these misunderstandings and misconceptions, leaving employees in the dark.
However, with a little professional tax training, HR and payroll professionals can guide staff members through this process effectively.
The myths keeping workers in the dark
There are several misconceptions, or myths, keeping employees in the dark. One of the most prominent myths is that a cost-to-company remuneration structure is taxed higher than a basic plus remuneration structure.
However, this is simply not true, and, in fact, the remuneration model makes no difference. Employees are taxed on their yearly earnings, based on individual payroll elements of their remuneration package, which further debunks the misconceptions that annual bonuses are taxed differently and that one’s salary is taxed monthly.
Another major myth employees believe is that their income is taxed according to their fixed marginal rate. This is not true, as South Africa has a progressive tax system, which means that an employee’s total remuneration is divided into several portions called “tax brackets.” These brackets are taxed at different rates, with the lowest portion being taxed at 18% and subsequent portions at progressively higher rates, up to 45%.
Unfortunately, this then leads to another rather detrimental belief that one’s annual increase is taxed at a higher rate. This often coincides with ‘bracket creep’ fear and, for example, when employees receive an annual inflationary pay increase, which causes their income to fall into the next tax bracket.
Bracket creep fear can lead to employees second-guessing their reward package, more questions for HR and payroll, and ultimately, a decrease in morale. However, once you understand the progressive tax system, you will know that this fear is unfounded. Through our workshop, you can learn how to negate this fear and facilitate better understanding between employees and HR and payroll professionals.
Training
There are many more myths plaguing companies. However, with training, HR can effectively transfer the knowledge gained to staff members, keeping them out of the dark and eliminating all those time-consuming questions.
Tax Consulting South Africa offers an annual Employee’s Tax and Benefits workshop[1] aimed toward generating understanding and professional empowerment. This workshop has evolved for over a decade and ensures each delegate has an enjoyable experience and walks away with a far better understanding of the mechanics of tax.
The 2-day workshop incorporates 40-50 practical examples that covers the basics of employee tax, personal tax, and key benefits, allowing delegates to walk away with the ability to do tax calculations and verifications alongside the technical tax theory. This year, the workshop will also include the basics of expatriate tax.
With this knowledge and understanding, junior to senior HR, payroll, and reward professionals can better debunk myths and misconceptions within their companies. The structure of the workshop also allows those outside the HR and remuneration space, from employees to the CEO, to attend.
Debunk myths with training
Tanya Tosen, Tax and Remuneration Specialist at Tax Consulting South Africa and co-workshop presenter, encourages all employers to ensure their staff understand their tax liability. Through training, HR and payroll can gain effective tools to answer queries, debunk myths, and assist staff in better understanding their deductions and take-home pay at the end of every month.
The training takes place in Johannesburg on 3 and 4 May; register here
This year’s workshop will take place at the Indaba Hotel and Conference Centre, Fourways, on the 3rd and 4th of May 2023.
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