Why is tax calculated for 12 months if the employee has only been employed for a few months?

There are two standard methods for calculating employees’ tax: the periodic method and the averaging / annual equivalent method. For more information about these two methods, please refer to the following article:

• Tax (PAYE)

Generally speaking, both of these methods are acceptable to SARS. However, in the case where an employee’s tax period is shorter than a full tax year, SARS requires that the annual equivalent must be determined. Therefore, in such a case the tax is calculated on the income for a 12-month period.

More information can be found in the Guide for Employers in respect of Employees’ Tax, which is published by SARS every year and available on the SARS website.