A lot of clients get a little anxious when their employee returns from Maternity leave and the Payroll System is now reversing tax for this employee. This is a 100% normal, there is nothing for you to worry about.  It is normal that when a person comes back from Maternity leave that they receive tax back, this is due to the way that the Average Tax method calculation.

The average tax method looks at the income received from March (or the period of employment if you started in this financial year), divides it with the value of the periods worked and then times's it with the periods in the tax year.  Let’s say as an example you have been employed since March this year and you have received R7000 for this month’s work.  The average tax calculation will take the 7000 divide it with the 1 period work and times it by the 12 periods in the tax year, so this person's tax gets calculated on R84000.

So let’s say you worked from March to June, and went on Maternity leave in July, August and September.  So you would have received 7000 for March, 7000 for April, 7000 for May and 7000 for June, so before this employee went on Maternity leave she was taxed at 28000/4*12 = 84000.  In the months that you were on Maternity leave you received a zero payslip so now that your back in the 8th month of the tax year you have the 7000 that you receive in this month and the 28000 from the months before the Maternity leave. So now you have been employed for 8 periods so it will take the 35000 (28000+7000)/8*12 = 52500 which is less than the amount that you have paid tax on previously.  Due to this, the calculation pays you back the over payment.

So in the first couple of months after Maternity leave Payroll can recalculate tax in a negative, but as the months goes on it will start calculating an amount and will return to normal.