Matthew Lester: The dreaded festive Ds – 13th cheque, broke in Jan

Matthew Lester examines the mood swings around the festive season as the immediate joys of a 13th cheque (not for everyone) are soon beaten away by the tax man. As the expert Lester says, it usually pushes the taxpayer into a higher marginal bracket.

Then there’s the earlier pay date, which generally leads to over-used credit cards or a visit to the loan shark come January. This as the month usually brings with it a trip to the shops for back to school goodies.

It’s a tongue and cheek look at what December really brings, so much so that Lester’s calling for 13th cheques to be paid in January, strike anyone? Happy holidays. – Stuart Lowman

By Matthew Lester

My description of hell on earth is a shopping mall in the festive season. People just seem to loose all sense of reason.

In the next few days many South Africans will receive their annual bonuses and 13th cheques. And many employers think they will score points with their staff by advancing the December payday by as much as two weeks.

Then comes the first disappointment. The tax on the bonus or 13th cheque is generally a higher rate than on the monthly cheque. That’s just how the employees tax system works. These payments push the taxpayer into a higher marginal tax bracket.

Then it’s off to the mall with the family full of Christmas expectations accumulated over the past year. And all the money is gone before Christmas. Sometimes even before the family leaves on their annual holiday. So bring out the (bonus) if you are lucky. Or visit the loan shark if you are less fortunate.

Many miss the point that by having an early payday in December it leaves the employee to survive 6 weeks before the January payday comes around. And if Christmas largess doesn’t break the proverbial camels back, today’s back to school shopping list in early January most certainly will.

All of this comes before the Valentine’s day campaigns and, for some, the second provisional tax payment due at the end of February.

Woolies_Somerset_Mall

Lawyers will tell you that January is a bumper month for initiating divorce proceedings. And its not because the mother-in-law arrived unannounced for Christmas but rather because everyone is just stone cold broke. Crisis center workers will also tell you that January is the busiest time of year.

All the dreaded Ds (drunk, drugs, depression, dumped, divorce, down and out, etc) feature prominently around the festive season. But the biggest, by far, is debt. In fact it is the primary cause of all the others.

The retail sector and SARS would hate this suggestion. But wouldn’t it be a better idea if bonuses and 13th cheques were paid in January. In that way employees could perhaps enjoy a positive start to the new year, rather than collapsing under a mountain of debt of the previous year.

And if Christmas presents are a little disappointing or Christmas lunch is reduced to a bring and braai, get over it. Our breadwinners must be kept in good health to face the challenges that will be 2016.

Bah! Humbug!

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