Why does the system not allow the value of an employee's tax paid to go into a negative?

This feature is available on all PaySpace editions.

As of March 2022 following changes were been made to the system in respect to negative results of the South African tax calculation -

For all frequencies, MTD PAYE will no longer go into a negative (even though the YTD PAYE value is greater than zero). 

For a Weekly or Fortnightly frequency, PAYE will not go into a negative in the 1st week or fortnight of the month (even though the YTD PAYE value is greater than zero).

When the Tax Paid component is negative the system will suppress the value to zero in the front end, however, the system will still store the negative value in the back end and offset it against future positive tax. The Tax Adjustment component can be used to refund tax should the customer wish to do so. If the customer does wish to refund tax, it is usually best practice to refund tax in the run in which the negative value occurred.

Legislation - 

Paragraph 2(1) of the Fourth Schedule to the Income Tax Act requires every employer who is resident, or representative employer in the case of any employer who is not resident, who pays or becomes liable to pay any amount by way of remuneration to any employee, to deduct. or withhold employees' tax from that amount in respect of the liability for normal tax of that employee and shall, subject to the Employment Tax Incentive Act 2013, pay the amount SO deducted or withheld O the Commissioner within seven days after the end. of the month during which the amount was deducted or withheld. The Income Tax Act does not make provisions for employees' tax refunds and employers will therefore not be able to submit monthly employees' tax declarations with PAYE values that are less than zero.

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