How Well Do You Understand Your Payslip?

“What is Salary? Something which comes like tortoise and goes like rabbit.”

~ Anonymous

The payslip is an extremely important part of your working life. That piece of paper proves you have an income. But it also allows you to fully understand your deductions.  It’s used when applying for credit, renting a property and applying for a job. One of the first steps on your financial journey includes understanding your payslip and how tax affects your monthly expenses.

Let’s  break down the finer details of the payslip. Each company is different, but all have certain common elements such as PAYE Tax and UIF. If you are not sure what these acronyms are, don’t fret we will unpack these, and other common factors found on your payslip. Of course, if there is an element which we have not covered, feel free to leave a comment below and we will assist where possible.

Gross Salary, Nett Pay and Cost to Company

A common confusion arises when we need to differentiate between gross and nett. Gross salary is the amount of money before all the deductions happen. Nett Pay is the amount which appears in your bank account.

The easiest way to remember it, is that gross means large, not disgusting, as used in teenager slang. It is the larger amount of money. Once that larger amount has been caught in the ‘net of all the deductions’ you have, your nett pay is the amount which you take home.

Cost to company on the other hand, is the overall cost that the company pays to have you work for them. This means every contribution including their share of tax and benefits which you have, makes up this amount.

Skills Development Levy (SDL)

The Skills Development Levy is only applicable with companies who qualify and register. The SDL works out to 1% of your salary and will appear on your payslip every month. You do not pay this amount, your company does. The SDL is there to promote an entire host of uplifting actions within the workforce.

The Necessary Information

Every payslip must under law contain certain information. These details make the payslip legal. They include: Your name, identity number, tax number, the date on which you were appointed, your address and your employee number if you have one. You should also see the company’s name and address.


‘Pay as you earn’ tax is the income tax which you pay. This is your contribution to the country. Depending on your gross salary, you fall into a specific tax bracket. You should always check that the correct amount of tax is being taken off your salary. You can do this by visiting the SARS website here. Each month your employer will deduct PAYE Tax and will pay SARS on your behalf.

Unemployment Insurance Fund (UIF)

All employees except a few, are liable to pay UIF. The Unemployment Insurance Fund is designed to provide short-term relief to workers when they are unable to work. You can claim this fund in the event that you become unemployed, or if your company doesn’t pay maternity or parental leave, illness or adoption. The fund also assists the dependents of a deceased contributor to the fund. UIF now has an online platform in South Africa.


There are many different types of deductions which could show on your payslip. These can include medical aid contributions, court ordered deductions etc. It is important to know that your employer is obligated to ask your permission before making deductions.

Fringe Benefits

Fringe benefits will appear on your payslip. These are extra added benefits from your employer over and above your salary such as a medical aid, car allowance, petrol allowance etc.

Medical Aid Tax Credit (MTC)

If your company supplies medical aid they will usually pay a portion of your medical aid and you may pay per extra member. You may notice a medical aid tax credit applied in this case. Medical Aid Tax Credit (MTC) was created to bring greater equality into the country concerning the cost of health services. If your medical aid is on your payslip, your company can use the MTC system to reduce the amount of tax that you pay. You can read further on medical credits here.

While the payslip varies from employee to employee, it is a great tool for you to understand. It also shows you whether your gross salary is market related or not. It allows you to understand where your money is going. It is important to make time each month to go over your payslip and double check that everything is correct. If your nett pay is not covering your debt repayments, reach out to Debt Rescue and see how we can assist you in lessening the stress and feeling more of your nett pay in your budget.

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