Why do I owe tax after changing jobs during the year?

Direct answer

You can owe tax after changing jobs because SARS assesses the total income you received in the tax year, while each employer generally deducted PAYE on the salary that it paid you. SARS says the combined annual assessment can be higher than the total PAYE deducted by separate employers, even where each employer deducted PAYE correctly.

This is a possible outcome, not an automatic one. Your assessment depends on your full annual facts, including all income, deductions and credits.

What this means in practice

PAYE is an advance payment toward the tax SARS determines on assessment. When there is one employer for the full year, the PAYE deducted monthly will usually be close to the final liability for that employment income. A job change can create two employment sources in one tax year.

SARS explains that South African personal income tax uses a progressive tax rate table. It adds the taxpayer's income sources together to determine the final liability. A former employer and a current employer can each calculate PAYE on the salary they pay, without either employer calculating the tax on the other employer's salary.

That is why the final result can be different from what you expected from your payslips. It does not, on its own, prove that your former employer, current employer or SARS has made an error. Start by checking the certificates and assessment, not by assuming the amount is wrong.

Step-by-step

1. Collect the certificates for both jobs.

Obtain the IRP5 or IT3(a) from the former employer and the current employer for the relevant year of assessment. Keep the original documents and identify the period each one covers.

1. Compare the certificates with your ITR12.

Check that both certificates appear as separate entries and that the details match the documents you received. Do not combine them or change a prepopulated certificate entry yourself.

1. Review the assessment result.

When SARS issues the ITA34, compare the assessment with the ITR12 and the certificates. The assessment is the place to see the result of SARS considering the annual return, not the individual payslip alone.

1. Check whether the issue is a return error or an assessment question.

If a certificate or return entry is factually wrong, obtain a correction from the issuer or use the proper return-correction route when available. If the information is correct but you disagree with the assessment, the appropriate route can be different.

1. Keep the supporting record together.

Save both certificates, the ITR12, ITA34, statement of account and any correspondence. This makes it easier to identify whether the balance is caused by the combined income or a factual discrepancy.

1. Consider future PAYE planning where relevant.

SARS says a taxpayer receiving income from more than one employment source may request in writing that one or more employers deduct additional monthly PAYE. A provisional taxpayer may instead pay a higher amount of provisional tax. These steps can reduce a future balance but do not revise a current assessment.

Documents and records to keep

• IRP5 or IT3(a) certificates from the former and current employer.
• Payslips and employment dates that help identify each employment source.
• Submitted ITR12 and SARS ITA34 assessment.
• Statement of account and proof of any payment.
• Employer correction correspondence, if a certificate was wrong.

Important limits and exceptions

This guide does not say that every taxpayer who changes jobs will owe tax. The assessment depends on all annual information. An amount payable may need further checking if one certificate is wrong, income is missing, or the assessment does not reflect the return you submitted.

Do not assume that changing jobs alone makes the former employer responsible for the final balance. SARS's explanation is about the way more than one source of income is assessed together.

This article does not calculate tax, give a payment arrangement or decide whether an assessment should be disputed. It explains why a balance can arise and the records to check first.

When to get tailored advice

Get tailored help if the amount is material, either certificate is wrong or missing, you also have other income, or you have received a SARS verification, debt or assessment notice that you do not understand. Help is also appropriate if you need to distinguish a return correction from an objection.

TaxProof can help you organise the certificates, return and assessment records so that the position can be reviewed clearly. SARS determines the assessment and the applicable process for correcting or disputing it.

Related TaxProof guides

• How to object to a SARS assessment
• How do I report income from two employers on one SARS return? (B02-IND-002)

Sources

• SARS, Income from two sources