Payroll Concepts > Statutory Deductions and Contributions (ZA) > Tax (PAYE) (ZA) > Calculating PAYE on Irregular Income

This article provides an explanation and examples of the calculation of PAYE where an employee earns both regular and irregular income.

Note:

• These methods will be discussed with reference to monthly-paid employees but the principles are the same for employees who are paid weekly etc.
• The term “income” will be used in this article to refer to the employee’s taxable income (remuneration for PAYE purposes).

# Calculating PAYE on Irregular Income

It is important to note that there are two types of income: regular and irregular. Regular income is anything that is paid at regular intervals such as salaries and commission; irregular income is anything that isn’t regular, such as an annual bonus. The total PAYE due for a period is calculated as:

Total PAYE = PAYE on regular income + PAYE on irregular income

Calculating PAYE on regular income is outlined in the following article:

PAYE on irregular income is calculated as the difference between tax on an employee’s regular income and tax on their total income. It can be broken down as follows:

### Step 1: Calculate the projected total income for the year

This is calculated as the sum of the annual equivalent for irregular income and the total irregular income.

### Step 2: Calculate the tax on the projected total income for the year

Use the tax tables to determine the tax that would be paid if the employee earns the projected total income for the year

### Step 3: Calculate the tax on the irregular income

This is calculated as the difference between the tax on the projected total income and the tax on the annual equivalent.

# Example: Calculating Tax on Irregular Income

An employee earns a sign-on bonus of R20 000. Their annual equivalent is R120 000 and the annual tax liability on the annual equivalent is R21 600. The 2022 tax table here applies.

# Integrated Example: Calculating PAYE with Regular and Irregular Income

Suppose that an employee earns a basic salary of R14 000, R12 000 and R14 000 in March – May 2022 respectively. They also receive a bonus of R28 000 in May 2022.

#### Irregular income

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