Betty Bookkeeper gives advice on calculating PAYE for commission earners – April 2014

Hello darlings. I hope that you all had a great April and are working hard! 

This month, I received a really interesting question:

Dear Betty

I would appreciate some help with the following question…

How is the tax rate calculated for an employee that earns a basic salary, as well as commission? According to my understanding, you add the commission to the basic, and then work out the annual equivalent to get the taxable amount. The sliding scale is then applied to this amount.

I am not sure what happens in the following month if the commission earned is much less or much more than the previous month. Do the earnings-to-date and the tax-paid-to-date have an effect on the tax calculations of the following months?

Thanking you in advance,


My answer is:

Hi Yumna

I hope that you’re well, and thank you very much for your great question.

According to SARS’ guidelines, each month should be worked out in isolation. Commission earners should submit an annual tax return, and at that point receive a refund if too much PAYE has been withheld. This is generally the case.

There is however, nothing stopping an employer to calculate the tax more accurately if they want to refer to year-to-date figures. They must just take care not to underwithhold PAYE, which would create a tax problem for the commission earner.

Hope that helps!


Don’t forget that I’m here to answer your questions about the ICBA, or just queries about your accounting work. All you have to do is email me!