In most industries today, changing jobs means staying current and ensuring growth for both your career and you as an individual. You seldom find anyone working for the same company throughout their career and most will consider changing jobs every five years.

This can be an exciting but stressful time as you wrap up your responsibilities with your previous employer and prepare yourself for the challenges of your new position. With all that is going on, it is important to take some time to consider the tax implications that come with changing employers.

The type of your new employment can affect your tax, and your career change can have varying degrees of impact on your pension planning. It is therefore a good time to review your financial situation.

Tax and Standard Employment

If you are moving to a permanent, full time position with an employer then all you will need to provide them with is your tax number.

Should you be working for more than one employer, it is imperative that you inform both employers so that they can deduct the correct tax.

Tax and Non Standard Employment

If you are employed irregularly, e.g. you are paid daily or paid casual commission, your employer will still have to register you for tax. You will pay tax at a rate of 25 percent of your income. If your taxable earnings did not warrant this level of taxation, you will be refunded at the end of the tax year.

What details will my new employer need?

If you are already registered as a taxpayer, you will need to supply your new employer with:

  • your tax number
  • your residential address
  • your bank details

If you are being paid in cash or paid through a third party, your employer won’t need your bank details as they are not required by SARS.

Not registered for Tax?

It is your employer’s responsibility to ensure that you are registered for tax. Advise your new employer if you are not registered so they can address this moving forward.

Tax and Retirement Planning

A major consideration when changing jobs is your pension planning. This is often a dangerous time for many South Africans when the temptation of cashing out your retirement contributions is often too much. Besides the possible tax you may need to pay, cashing in your retirement savings means you have to start from scratch again, making it harder to reach an amount that you could actually live on when you are at retirement age.

Find out what pension provision is being offered by your new employer. Often you will be able to transfer your funds, tax free, from one employer to another.

Should you require tax advice, call Dirmeik Consulting on 021 421 4444.