What is PAYE?

PAYE or employee tax, is the tax that you pay to the government based on the salary you earn.

Who needs to register for PAYE?

All businesses that has an employee that earns more than the current threshold, should register. The current threshold is R8 009 per month. It does not matter what type of legal entity your business is, if you meet this requirement, you have to register, whether you are a private company, non profit company or sole proprietor etc.

Monthly process.

Every month, the PAYE, or employee tax, has to be deducted from the employees salary and paid over to SARS. It has to be paid before the 7th of the following month to avoid penalties.

It is mandatory for employers to deduct employee tax from their employees.

Tax certificate

Every year, during May, tax certificates have to be issued to employees. This process is called the PAYE recon or EMP501. This is a summary of the tax deducted from employees during the financial year, and the amount paid over to SARS. The certificate includes the remuneration of the employee and the tax deducted. The employees will use these certificates to submit their personal income tax returns.

The EMP501 recons can only be submitted electronically, the manual process has been phased out by SARS.

Employers also has to submit a mid year recon, which covers the period of March to August.


If any employers total remuneration to all employees exceeds R500 000, they have to register for SDL(Skills development levy). This is a fund created by government to fund the learnership for employees. An amount of 1% of every employees salary should be contributed towards this, and paid over to SARS with the PAYE. Please note that this is an employer contribution and should not be deducted from employees.

If you need assistance to register for PAYE, click here.

paye employee tax

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