By Yolandi Esterhuizen, Legislation Manager at Sage VIP:
The new tax year is well underway, bringing with it a number of changes that could affect your payroll calculations and the tax you need to pay on behalf of your employees. Here are some of the important legislative changes, Budget proposals and a few important dates of which you should be aware of if you’re to stay on top of your obligations for the 2015/2016 tax year.
Income replacement policy premiums
Have you made the necessary changes to your payroll system and processes to accommodate changes associated with income replacement policies? Premiums towards an income replacement policy were tax deductible in the previous years. Now, premiums are not tax deductible while pay-outs from such a policy are tax-exempt. Ensure that employees who are receiving an income replacement policy pay-out through the payroll are not taxed on this money. Also be sure that you’re not treating any policies you are paying on behalf of your employees as tax deductions.
Tax free savings accounts
Government has introduced a new incentive to save in the form of tax free savings and investment accounts. The earnings and growth on these products will not attract income, dividends or capital gains tax. Contributions to these savings accounts will be limited to R500 000 over the lifetime of an individual and R30 000 during any year. Encourage your employees to take advantage—it’s in everyone’s interest to promote saving in South Africa.
Return of earnings
The Department of Labour has extended the deadline to submit the 2014 Return of Earnings (ROE) to 31 May 2015. This gives you a little more breathing room to submit your return to the Compensation Fund, but it is best not to delay and get your ROE in as soon as you possibly can.
Residential accommodation fringe benefits
The calculation of the residential accommodation fringe benefit has changed for the new tax year. In the past, the greater figure between the expenditure to the employer and the value calculated with a formula was used. Now, the general rule is that the prescribed formula should be used to calculate the benefit in most cases. An exception to the general rule is when
- the employer obtained the accommodation from an unconnected party in terms of a transaction at arm’s length; and
- the ownership of the accommodation does not vest in the employer.
In the case of the above exception—usually where the employer rents the accommodation on behalf of the employee—the lower of the expenditure by the employer or the value calculated with the prescribed formula should be the fringe benefit value.
Employer annual reconciliation period
The annual reconciliation period commences on 1 April 2015. Be sure to submit your reconciliations via e@syFile and issue tax certificates to employees in a timely fashion.
ETI changes effective March 2015
Government changed the definitions of ‘wage’ and ‘remuneration’ for the purpose of calculating the ETI (employment tax incentives) with effect from March 2015. Now, an employee is deemed to work a full month if he/she is employed for 160 hours or more. The ETI refunds you can claim from SARS have also been amended. Employers should be familiar with the changes if they want to claim ETI correctly.
Proposed UIF limit decrease
The 2015 Budget speech proposed a temporary reduction of the UIF threshold. According to National Treasury, the reduction is proposed to take effect on 1 April 2015. If implemented, employers and employees will pay a maximum of R10 each per month to the fund rather than the current maximum of R148.72. The fund benefits will stay unchanged even though a lesser contribution will be made. This is not yet law, so keep your eyes open for any news from us.