How does PaySpace calculate PAYE for South African entities?
In South Africa, the preferred method for calculating PAYE liability is the Average/Cumulative Tax Method, which is based on Year-To-Date (YTD) earnings. This method is ideal for employees whose earnings vary greatly from pay period to pay period, such as those who earn commissions or work varying amounts of overtime.
To estimate annual earnings, the YTD earnings are multiplied by the number of pay periods in a year and divided by the number of pay periods to date.
The calculated annual tax on these estimated earnings is then multiplied by the number of pay periods to date, divided by the number of pay periods in the tax year. This results in the tax amount attributable to YTD earnings.
Finally, the tax paid to date is subtracted from this amount, yielding the tax amount payable for the current period.