Tax calculation on Bonus

How is one taxed on your bonus? If my bonus is R133 000, what amount should I expect to get out after Tax?

Your bonus amount simply becomes part of your total taxable income for the year, which may impact your tax bracket, i.e. the percentage of tax you pay on your income. The amount of tax withheld in your bonus month depends on which method your company uses to calculate tax. 

Method One: Annualisation of Income

In this method, your total income for the month, i.e. your basic salary plus your bonus amount, is annualised – or multiplied by 12 – to determine the annual taxable amount.

Method Two: Balance of Remuneration

The other method, called balance of remuneration, provides a more accurate view of income and therefore a more precise tax amount.

In this method, you first calculate the tax for the year when no bonus is involved, and then you determine the tax for the year with the bonus amount added. The difference between the two becomes the tax payable on the bonus component of her income, and must be added to the ‘normal’ tax amount.

Irrespective of which method your payroll uses to determine tax on any bonus amount you receive, you should always file a tax return with SARS to claim back any overpaid tax.

Please read our blog on How to calculate tax on your bonus for different examples.