Annual Bonus

SimplePay has a built-in item to accommodate the special tax treatment and reporting requirements for annual bonuses. An annual bonus is a reward (often performance-based) paid to an employee, usually at the end of the year or in the employee’s birthday month. To add an annual bonus to a payslip:

• Go to Employees, and select the relevant employee.
• Click on Add next to Payslip Inputs.
• Select Annual Bonus under Income.
• Enter an amount.
• Click Save.

Tax on a bonus

Often, employees are alarmed at the rise in tax (PAYE) on their payslips when they receive an annual bonus, and they may request to split or make provision for the tax to lessen the PAYE amount when the bonus is paid out. SARS does not cater for the provision of tax on bonuses and states that they are taxed as irregular income.

Our customers often use a voluntary tax over-deduction for this purpose, but this is incorrect. Instead, our Provision for Tax on Annual Bonus system item can be used to spread the tax on a bonus over several pay periods. Please see the help pages below for further information and instructions:

• Provision for Tax on Annual Bonus
• Voluntary Tax Over-Deduction
• Calculating PAYE on Irregular Income