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Digital Tax Guide: 2017/2018 Budget |
PAYE Employer Filing Season |Returns | Official Interest Rate | Coida | BCEA | SDL | UIF | PAYE | Travelling Allowances | Reimburse Travel | Donations | Subsistance Allowance | Tool Allowance | Medical Credits and disability expenses | Tax Deductions | Income Protection Policies | Retirement Annuity | Tax Rates | Public Holidays
We have compiled a convenient document consisting of highlights from the 2017/2018 budget. Please click here to view or contact us if you require any assistance.
SARS has announced the annual PAYE reconciliation submission season for the period 18 April 2017 – 31 May 2017.
All South African employers are required to reconcile and submit PAYE, UIF and SDL contributions for the period 01 01 March 2016 to 28 February 2017.
Employers are required to submit accurate employee tax certificates together with the EMP501 reconciliation for the year.
Individuals whose taxable income is only from a single employer and does not exceed R350 000 for the 2017/18 tax year are not required to submit tax returns.
The South African Reserve Bank increased the repo rate by 25 basis points from 6.75% to 7.00% per annum with effect 1 April 2016 and the official SARS rate to 8.00%.
Definition of “official rate of interest”
The official rate, in the case of a loan is equal to the SA repurchase rate plus 1 % change is due on the 1st day of the next month after the repo rate changed
R403, 500 per annum with effect from 1 April 2017
R377 097 per annum with effect from 1 April 2016
R355 752 per annum with effect from 1 April 2015
R312 480 per annum (1 April 2013 – Feb 2014)
R292 032 per annum (1 April 2012 – Feb 2013)
R277 860 per annum (01 March 2011 – Feb 2012)
R261 893 per annum (01 April 2010 – Feb 2011) Gazette 32903: This results in a split reporting year unless otherwise changed to 01 March 2010 as been practice for the last couple of years.
R239 172 per annum (01 March 2010)
BCEA earnings threshold remains R205 433 per annum for the 2017/18 tax year
Earnings threshold – R205 433.30 per annum (July 2014)
Earnings threshold – R193 805 per annum (July 2013)
Earnings threshold – R183 008 per annum (July 2012)
Earnings threshold – R172 000 per annum (July 2011)
Earnings threshold – R149 736 per annum (March 2008)
Payroll Threshold remains at R500,00.00 per annum – 1% Employer Contribution
The UIF earnings limit for Payroll purposes remains the same.
The UIF earnings limit was increased from R149 736 to R178 464 per annum or R12 478 to R14 872 per month with effect from 1 October 2012.
With effect from 1 March 2010, 80% of a travel allowance is subject to the deduction of employees’ tax. With effect from 1 March 2011, an exception is allowed in cases where the employer is satisfied that at least 80% of the use of motor vehicle will, during the year of assessment be for business purposes, then only 20% of the allowance is subject to the deduction of employees’ tax.
Employees must, in order to claim travel expenses for business purposes against this allowance when completing their income tax returns, keep record of actual business distances travelled (e.g. a logbook).
The full travel allowance must be reflected under the prescribed codes on the IRP5/IT3(a) tax certificates as described in the PAYE-GEN-01-G11 Guide for Employers in Respect of Employees Tax for 2018, Revision 13 Page 4 of 56.
EMPLOYER-PROVIDED MOTOR VEHICLES
There is no change to the taxable value per month and the rates remain the same for the 2017/2018 tax year. However, from 1 March 2015, the “determined value” of vehicles acquired, in any manner other than under an operating lease (as defined), on or after that date, will be the retail market value of such vehicle as determined by the Minister by Regulation.
If the vehicle was acquired under an operating lease (as defined) the monthly taxable value is equal to the actual cost to the employer incurred under that operating lease and the cost of fuel in respect of that vehicle.
With effect from 1 March 2011, the percentage rate for all employers-owned provided vehicles is 3.5 % per month of the vehicle’s determined value. However, vehicles with maintenance plans included within the purchase price at the time of purchase will trigger only a 3.25% monthly fringe benefit.
With effect from 1 March 2014, where the vehicle is acquired by the employer under an operating lease concluded at arm’s length and that are not connected persons in relation to each other, the value of a fringe benefit is the actual cost to the employer incurred under this lease plus the cost of fuel in respect of that vehicle.
80% of the fringe benefit must be included in the employee’s remuneration for the purposes of calculating PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes.
Refer to SARS website for more details.
- Where the distance travelled for business purposes does not exceed 12 000 kilometres per annum, no tax is payable on an allowance paid by an employer to an employee up to the rate of R3.55 cents per kilometre, regardless of the value of the vehicle.
- This alternative is not available if other compensation in the form of an allowance or reimbursement is received from the employer in respect of the vehicle.
The employer must deduct so much of any donation deducted from the of the employee and paid over by the employer to the relevant approved organisation on behalf of the employee.
Limitation The deduction may not exceed 5% of the remuneration after deducting pension, provident and retirement annuity fund contribution.
Note: This deduction may only be allowed if the employer will be issued a receipt
which reflects the details as prescribed in section 18A(2)(a).
Where the recipient is obliged to spend at least one night away from his / her usual place of residence on business and the accommodation to which that allowance or advance relates, is in the Republic and the allowance / advance is paid or granted to pay for:
Meals and incidental costs, an amount of R397 (2017: R372) per day is deemed to have been expended or:
Incidental costs only, an amount of R122 (2017: R115) per day is deemed to have been expended.
An employee is entitled to a medical tax credit in respect of medical scheme contributions paid by the employee, irrespective of the employee’s age.
- Taxpayers may deduct from their tax liability a tax credit of R303 (2017: R286) for the first two beneficiaries and R204 (2017: R192) for each additional beneficiary.
An additional medical expenses tax credit related to medical scheme contributions for taxpayers above the age of 65 must be taken into account to calculate the monthly PAYE.
- In the case of an individual who is 65 and older, or if an individual, his or her spouse, or his or her child is a person with a disability, 33.3% of the sum of qualifying medical expenses paid and borne by the individual; and an amount by which medical scheme contributions paid by the individual exceed 3X the medical scheme fees tax credits for the tax year; or
- Any other individual, 25% of an amount equal to the sum of qualifying medical expenses paid and borne by the individual, and an amount by which medical scheme contributions paid by the individual exceed 4X the medical scheme fees tax credits for the tax year, limited to the amount which exceeds 7.5% of taxable income (excluding retirement fund lump sums and severance benefits).
Current Pension Fund
- Amounts contributed to pension, provident and retirement annuity funds during a tax year are deductible by members of those funds;
- The deduction is limited to 27.5% of the greater of remuneration for PAYE purposes or taxable income (both excluding retirement fund lump sums and severance benefits); and
- The deduction is limited to a maximum of R350 000;
Note: The above limit is applied to the employee contributions towards all retirement funds and not separately to each fund.
- Amounts contributed by employers are taxed as fringe benefits;
- Amounts contributed by employers and taxed as a fringe benefit are deemed to be contributions by the individual employee;
- Any contributions exceeding the limitations are carried forward to the next tax year and are deemed to be contributed in that following year. The amounts carried forward are reduced by contributions set off when determining taxable retirement fund lump sums or retirement annuities.
Individuals & Trusts
Retirement fund lump sum withdrawal benefit
Retirement fund lump sum benefits or severance benefits
Tax-Free Savings Account
Contributions to all tax-free savings accounts will be limited to R33 000 during any year.
Employee Tax Incentive
The Employment Tax Incentive Act came into effect on 1 January 2014. The initial effective period was three years but it was extended to end on 28 February 2019.
The definition of “employee” in the ETI Act has been aligned with the definition of “employee” in the Labour Relations Act because the aim of the ETI is to assist in creating employment opportunities regulated by labour legislation.
Tax Amendment Act changed the calculation method of the ETI. If an employee is employed for less than 160 hours in a month, then he or she is deemed to have worked for a part of a month. Thus his or her remuneration must be grossed-up by using the ratio of the hours employed to 160 hours.
- Permanent employment
The changes will have no impact for employees who work at least eight hours a day, five days a week since these employees will work 160 hours or more each month. It is only categories such as short time arrangements and mornings-only employment where the employed hours will contractually amount to less than 160 hours a month. In these cases, payroll systems will have to allow the employer to data capture the ‘contracted’ hours for qualifying employees who are employed for less than 160 hours pm.
- Temporary employment
The biggest challenge lies with temps and casuals, who work when they’re called in because there is work for them to do. In this case, it is debatable whether there is a difference between hours worked and hours employed. One can only assume that the hours employed are the same as the hours worked for that month.
This means that in order to be able to calculate the ETI benefit, the employer will have to record and capture the hours worked by each casual into the payroll every month. Without these hours, the payroll’s ETI calculation will not comply with the law. If this interpretation of the draft amendment is correct, it will mean a significant increase in the employer’s workload for casuals who qualify for the ETI.
Interest withholding tax is a final tax that will be levied at a rate of 15% effective from 1 March 2015.
The withholding tax must be levied on interest paid to a non-resident where the interest is of a South African source.
Employer Provided Residential Accommodation
A taxable fringe benefit arises where an employer provides an employee with residential accommodation either free of charge, or for a consideration which is less than the “rental value”.
The value of the benefit are, where the accommodation is owned by the employer or by an associated institution in relation to the employer, calculated with reference to a prescribed formula.
|New Year’s Day||1 January|
|Human Rights Day||21 March|
|Good Friday||14 April|
|Family Day||17 April|
|Freedom Day||27 April|
|Workers’ Day||1 May|
|Youth Day||16 June|
|National Women’s Day||9 August|
|Heritage Day||24 September|
|Public Holiday||25 September|
|Day of Reconciliation||16 December|
|Christmas Day||25 December|
|Day of Goodwill||26 December|
* If any of these public Holidays fall on a Sunday the following Monday shall be a public holiday