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1. TERMINOLOGYAll references to ‘he’ or ‘his’ includes ‘she’ or ‘her’ in the case of a femaletaxpayer, and ‘it’ or ‘its’ refers to a taxpayer other than an individual, and isnot intended to be discriminatory.The word ‘company’ when used in the context of the Income Tax Act, 1962includes a closed corporation, and the term ‘director of a private company’includes a member of a closed corporation who performs the same duties.A person includes both a natural person and a legal entity.A natural person for tax law purposes is:• an individual, or• a sole proprietor, or• a partner in a partnership.A legal entity for tax law purpose is:• a public company, or• a private company, or• a closed corporation, or• a trust, or• any divisional council, municipal council, village management board or likeauthority.2. DEFINITIONS & EMPLOYEES’ TAX CONCEPTSEmployees’ tax is an advance payment against the liability for income tax atthe end of the tax year, and is collected through a system of employees’ taxand provisional tax payments. The employer must withhold employees’ taxfrom all remuneration paid or payable to an employee during the tax year, andthe Fourth and Seventh Schedules to the Income Tax Act have been devotedto this requirement.Remuneration and employees’ tax are thus merely estimates to allow theadvance collection of income tax on a regular and equitable basis.The Fourth Schedule to the Income Tax Act requires three elements to bepresent before employees’ tax can be withheld for payment to SARS:• an employer• paying remuneration• to an employee.6 Payroll Pocket Guide 2013|2014© 2013 Sage VIP