DANIEL BAINES: Welcome to the world of work - and paying taxes
If you are graduating from university at the end of this year and starting your first job next year, the following information pertaining to your taxation will come in very handy.
An individual's tax year runs from March 1 until the end of February. The 2018 tax year runs from March 1 2017 until February 28 2018.
Let's assume that you start work early in January next year.
In this case, your first major income (presuming you have not earned large amounts while studying) will come in your pay cheque at the end of January.
Let's say that your salary is R15,000 a month. Your employer will probably tax you as if you had been working for the entire tax year.
You will then pay tax of R1,563 a month for January and February.
You should not, however, be liable for this tax. This is explained below.
For an individual under the age of 65 years, the tax threshold is R75,750. This means that if your taxable income does not exceed this amount for the tax year, you should not be paying any income tax.
Your total taxable income for the tax year, presuming you have not had other taxable income, is R30,000 (your January and February salary).
You will not, under the above circumstances, be liable for taxation on your salary for January and February as you fall under the tax threshold for the 2018 tax year - your income from March 1 2017 to February 28 2018 is R30,000, which is below the threshold amount of R75,750. In other words, you have overpaid income tax during the 2018 tax year.
In order to get a refund from the South African Revenue Service of the tax that was overpaid (R1,563 in January and February), you will need to submit your tax return when the 2018 tax season opens (this will probably be July 1 2018).
If you were working during your studies, the additional income earned during this time will need to be added to your salary from your new employer in order to determine whether your taxable income for the 2018 tax year exceeds R75,750; if it does, you will have to consider your circumstances to determine whether you will receive a refund.
• Baines is a legal adviser and tax consultant at PW Harvey & Co