Statutory Deductions Explained

Master South African statutory deductions including SDL, medical aid tax credits, pension contributions, and other mandatory payroll deductions for complete compliance.

Important Note

This guide covers statutory deductions beyond PAYE and UIF. Rates and thresholds are updated annually - always verify current rates with SARS.

Key Statutory Deductions

Skills Development Levy (SDL)

Contribution to national skills development initiatives

Employer only

Application

Annual payroll > R500,000

Calculation Method

1% of total annual payroll (excluding first R500,000)

Example Calculation

Annual payroll R2,000,000: SDL = (R2,000,000 - R500,000) × 1% = R15,000

Medical Aid Tax Credits

Tax credits for medical aid contributions

Fixed amounts

Employee (via reduced tax)

Application

Employee belongs to medical aid

Calculation Method

R347 first member + R234 each additional member + R154 each additional dependant

Example Calculation

Employee + spouse + 2 children: R347 + R234 + R154 + R154 = R889 monthly credit

Pension/Provident Fund

Retirement savings contributions

Variable

Employee and/or Employer

Application

Employee participates in approved fund

Calculation Method

Percentage of pensionable salary (typically 7.5-15%)

Example Calculation

R20,000 salary × 7.5% = R1,500 monthly contribution

Travel Allowance

Taxable benefit for business vehicle use

Fixed or actual

Calculated for tax purposes

Application

Employee receives travel allowance

Calculation Method

Fixed rate per km or actual cost method

Example Calculation

R3.98 per km for vehicles > 1600cc (2024 rates)

SDL Calculation Examples

Small Business (Annual payroll R400,000)

R0 (below threshold)

SDL only applies when annual payroll exceeds R500,000

Medium Business (Annual payroll R1,200,000)

R7,000 annually

(R1,200,000 - R500,000) × 1% = R7,000

Large Business (Annual payroll R5,000,000)

R45,000 annually

(R5,000,000 - R500,000) × 1% = R45,000

Tax Credits & Deductions

Medical Aid Contributions

R347 + R234 + R154

First member + additional members + dependants

Max Benefit: Unlimited (within contribution limits)

Retirement Annuity Contributions

Tax deduction

27.5% of taxable income or R350,000 (whichever is lower)

Max Benefit: Reduces taxable income

Disability Income Protection

Tax deduction

Premiums for approved disability cover

Max Benefit: Full deduction if qualifying policy

Compliance & Deadlines

Deduction	Frequency	Deadline	Authority	Penalties
SDL	Monthly	7th of following month	SARS	10% penalty for late payment + interest
Medical Aid Credits	Monthly	With PAYE submission	SARS	Incorrect credits = audit risk
Pension Fund	Monthly	By fund rules (usually 7th)	Fund Administrator	Late payment penalties per fund rules

Best Practices

Calculation Accuracy

Use certified payroll software with updated rates
Verify annual thresholds at year start
Double-check medical aid member details
Maintain proof of fund registrations

Record Keeping

Keep medical aid certificates on file
Document pension fund enrollment
Track SDL calculations annually
Audit deductions quarterly

Common Mistakes to Avoid

SDL Calculation Errors

• Including the first R500,000 in SDL calculation
• Not updating annual payroll thresholds
• Forgetting to register when threshold is exceeded

Medical Aid Credits

• Using outdated credit amounts
• Incorrect dependant counting
• Not updating when family changes

Continue Learning

PAYE & UIF Basics

Master the fundamentals of income tax and unemployment insurance calculations

Payroll Frequency & Timing

Learn about payroll cycles, payment timing, and scheduling best practices

Master All Payroll Deductions

Understanding statutory deductions is crucial for compliance. PayMax automates these calculations to ensure accuracy and compliance.

SA Compliance Guide Back to Fundamentals