South Africa 2018/19 Budget Speech
The Minister of Finance, Malusi Gigaba, has delivered the Budget Speech for the fiscal year 2018/19 on 21 February 2018.
Highlights of the Budget Speech summarized:
- The budget deficit is projected to narrow from 4.3% GDP in 2017/18 to 3.5% in 2020/21
- The VAT rate will increase from 14 to 15% from 1 April 2018
- An increase in the ad-valorem excise duty rate on luxury goods from 7% to 9%
- A higher estate duty tax rate of 25% for estates greater than R30 million
- A 52 cents per litre increase in the levies on fuel, made up of 22 cents per litre for the general fuel levy and 30 cents per litre increase in the Road Accident Fund Levy
- Increases in the alcohol and tobacco excise duties of between 6 and 10%
- The plastic bag levy, motor vehicle emissions tax and the levy on incandescent light bulbs will be raised to promote eco-friendly choices
- A health promotion levy, which taxes sugary beverages, will be implemented from 1 April 2018
- Some relief will be provided for lower income individuals through an increase in the bottom three personal income tax brackets and the rebates
- Personal income tax will bring in R505.8 billion, VAT R348 billion and company tax R231 billion in the 2018/19 financial year
- An additional R36 billion (R28 billion last year) of tax revenue will be raised by proposed measures in 2018/19.
Important changes affecting Payroll:
Tax Rates from 1 March 2018 to 28 February 2019
Individuals and Special Trusts
Tax Rebates and Tax Thresholds
CRS Tax Pocket Guide for 2018-2019 with additional information to follow
Contact our legislation team at firstname.lastname@example.org if you require any additional information.
© 2018 CRS Technologies (Pty)Ltd. All Rights Reserved.
We’ve always emphasised the value of a single, fully integrated HR and Payroll database. We know that businesses gain a great deal more advantage by leveraging the Power of One than by relying on multiple HR systems.
However, the market does not take things on face value and, as a rule: businesses require proof before committing to investment.
For that reason, we continue to highlight the benefits of our Power of One offering, specifically the fact that our solution enables the end-to-end lifecycle of each employee of your workforce.
We continue to assist blue chip clients to unlock substantial ROI by providing innovative solutions that simplify and optimise the complexities of HR management and compliance.
Our Power of One offers innovation, automation, integration and simplification, and this is integrated into the HR management function. And this empowers the business with simplicity, efficiency and optimisation!
Welcome to HR and payroll management of the future!
Compliance with labour legislation is tricky at the best of times, especially when it involves remuneration and tax. Legislation that governs director’s PAYE for executive payroll is particularly complex and this is why we advocate outsourcing this responsibility.
This type of remuneration is often only finally determined towards the end of the tax year or even in the following tax year, which makes PAYE calculations and UIF deductions a challenge.
Typically, the director is required to work out a deemed monthly salary using the average remuneration earned during the previous year of assessment.
Business leaders also need to be aware of the relevance of deemed remuneration, as determined by a SARS formula, to overcome issues with collecting monthly PAYE for directors.
Specifically, deemed remuneration applies to all directors, including members of CCs.
Among the other terms related to this compliance is that directors will always be taxed on actual remuneration received each month. The tax on the actual remuneration is compared to that which is calculated on the deemed amount and, if the latter is higher, the company pays the difference over to SARS.
If we needed a reminder of the intricacies involved in compliance with this legislation, then consider that we are only now discussing the issue of executive directors.
We believe that outsourcing makes business sense and that is the message we are pushing to the market.
As South African businesses face the challenge of a new year, it is important for business leaders to realise the implications of two new pieces of legislation: the Taxation Laws Amendment Bill (TLAB) 2017 and the Tax Administration Laws Amendment Bill (TALAB) 2017.
The amendment proposed by this legislation has been published in the Government Gazette 41342 of 18 December 2017 and Government Gazette 41341 of the same date.
This has paved the way for several significant changes to the Taxation Laws Amendment Act 17 of 2017, and it is critical that business leaders take note.
Below is a list of these changes and their potential impact on business.
Limitation of foreign employment income exemption: Tax residents outside of South Africa for more than 183 days as well as for a continuous period of longer than 60 days during a 12-month period rendering employment services, will now only be exempted up to the first R1 million of their employment income earned abroad.
Any foreign employment income earned over and above this amount will be taxed in South Africa, applying the normal tax tables for that particular year of assessment.
Increase of thresholds for exemption of employer provided bursaries to learners with disabilities: The need arises to clarify employer obligations to verify disability status of bursary holders, along with family connection and duty of ‘care and support’.
Transferring retirement fund benefits after reaching normal retirement date: It was requested that the ability to transfer funds after the normal retirement date also be extended to pension and provident funds and to pension preservation and provident preservation funds, as well as retirement annuity funds.
Dividends on employee share incentive schemes: The discussion surrounding the differentiation between an employee share holder and an individual that acquired shares was held. The request was partially accepted. The proposed wording will be changed to delete the proposal that the person by whom the dividend is distributed (a CSDP in the above comment) must deduct or withhold PAYE.
One of the main changes in the Tax Administration Laws Amendment Act 13 of 2017 is: spread of PAYE cap on deductible retirement fund contributions over year (R350 000.00):
Consultation with the payroll software industry indicated that the application of the cap for PAYE purposes will take on a cumulative basis for the portion of the year of assessment that the employee receives remuneration from an employer.
For example – if an employee is employed by an employer for seven months during 2018/19 tax year a cumulative deduction limitation of R204 166.67 will apply in the seventh month.
There are a lot of decisions to take in and consider and a great deal for business to deal with by way of change to tax legislation.
We recommend consulting with our legislation team at email@example.com for in-depth insight, advice and knowledge.
We’ve had a great start to the year at CRS, finding our groove and settling into our normal steady pace. We’ve already had new business enquiries and I am seeing the market being a little more bullish, so CRS is surging forth on an upward trajectory that is fresh, positive and our 2017 momentum has comfortably carried us into this first leg of the new year. Taking a wider view, the change of guard in the ruling party promises renewal after years of low economic growth and low confidence, and the political will to rectify past mistakes has started to reassure the corporates. I hope we really will see big infrastructural spends from the private sector picking up again now the political changes are being bedded down. Against this backdrop, the Budget was a mixed bag of ‘rebuild and restore’ with a few stings that will be felt by almost all South Africans but designed to fend off what feels like an ever present threat of ratings downgrades. The VAT increase will certainly impact those already on or near the poverty line but I guess time will tell if it does comfort the ratings agencies, which we are assured it will. Another interesting year ahead both politically and economically, that’s for sure!
What’s ahead in HR? Well, in 2018, the sector is predicting some interesting trends, most of them underpinned by technology in some form. The persistent debate about people versus platforms is, in my opinion, no debate at all because when you look at it in an HR value chain, a platform is nothing without people. The true skill is in being able to successfully merge the two in a holistic environment that a) drives operational efficiencies and b) gets the balance right between disruption and displacement. HR managers still tend to tremble at the mention of automation but it is not about taking jobs away, rather it is about making HR jobs easier. As our systems become more intuitive and scalable, and I include CRS systems in this, so HR departments will have more data than ever before at their fingertips. This is going to prove mission critical in so many areas, from using the data to improve employee engagement and also to future-proof your employees, to facilitating a more flexible workforce that can work remotely if needed, to real-time data that can drive decisions at Board level and reinforce the fact that HR is not just a cost centre but one with a real impact on revenue, to further streamlining monthly tasks like payroll and compliance, to processes for onboarding and managing millennials (who seem to have their own set of rules, but that’s ok!). In short, it is going to be a big year for HR technology but rest assured, we’re already ahead of the curve and busy with a few improvements to some of the CRS software components which we hope to unveil in the next month or two. As you know, if it is relevant and makes your life easier, we’ll build it!
Technology aside, another growing trend will be the need for employees to feel that their wellbeing in the workplace is important and they will openly favour employers who are pro-actively trying to reduce stress levels during working hours This may sound a bit ‘touchyfeely’ and new-age to some of the more seasoned HR professionals (like myself!), but move with the times we must and this is certainly something to be aware of when looking at your workplace culture this year. And don’t confuse employee experience with employee engagement. An easy way to understand it is to see employee engagement as a top-down view of the organisation and employee experience as a view from the bottom up. And both views are equally important. From a service point of view, I’d like to thank all our clients who have already noted the effects of our consolidation in 2017 and how it has benefitted delivery. However, I am a firm believer in agility as the client’s needs change so this is an area constantly under review. Please feel free to drop me a line at any time if you feel there are any gaps or if you feel we have room to improve. If I were to summarise where I think 2018 will take us as a sector, I believe that HR models in SA really have to become more evidencedriven. With CRS more than capable of providing that evidence using a number of different methodologies, we can play an integral part in optimising your HR department against the backdrop of new technologies and trends as well as the changing economic, political and regulatory environment in South Africa. All in all, it is already shaping up to be an interesting year so come with us, buckle up and enjoy the ride!
Have a great month
South Africa’s business landscape is highly competitive and is governed by legislation designed to enforce compliance. It is important for employers to know under what circumstances a critical resource such as the CCMA (Commission for Conciliation, Mediation and Arbitration) will get involved.
Nicol Myburgh heads up the HR Business Unit at CRS Technologies, a leader in HR and HCM solutions market. Myburgh explains that the CCMA can get involved in several matters including dismissal, wages and working conditions, workplace changes, or discrimination.
“It is important to note that an employee may ask the CCMA to conciliate or even arbitrate your dispute. A union or employer’s organisation may also initiate this action. Either party does not need the other party’s consent before taking the matter to the CCMA,” he says.
In the following instances the CCMA does not hear disputes where:
• an independent contractor is involved,
• the case does not deal with an issue in the Labour Relations Act (LRA), Employment Equity Act (EEA) or Basic Conditions of Employment Act (BCEA),
• a bargaining council or statutory council exists for that sector,
• a private agreement exists for resolving disputes (for example: private arbitration).
CRS Technology says the body has three major functions: conciliation, arbitration, and con-arb.
Employees may refer disputes about unfair labour practices and unfair dismissals on an LRA 7.11 application form to the CCMA or, where applicable, a bargaining council for conciliation. If the dispute remains unresolved, it can be referred to arbitration. The dispute can also be con-arb if there is no objection.
The company adds that conciliation is a process where a commissioner meets with the parties in dispute, and explores ways to settle the dispute by agreement.
At conciliation a party may appear in person or be represented by a director or employee of that party or any member, office bearer or official of that party’s registered trade union or registered employer’s organisation.
The meeting is conducted in an informal way.
“The commissioner may begin by meeting jointly with the parties and asking them to share information about the dispute. Separate meetings between the commissioner and each party may also be held. Parties are encouraged to share information and to come forward with ideas on how their differences can be settled. The commissioner may also put forward suggestions,” Myburgh continues.
When conciliation fails, a party may request the CCMA to resolve the dispute by arbitration.
At an arbitration hearing, a commissioner gives both parties an opportunity to fully state their cases. The commissioner then makes a decision on the issue in dispute. The decision, called the arbitration award, is legally binding on both parties. Attempts must generally be made to resolve the dispute through conciliation. If it cannot be resolved by conciliation, the parties can go to arbitration or the Labour Court, the Act specifies which dispute goes to which process.
This process may not be used for dismissals relating to unprotected strikes. These disputes must be referred to the Labour Court after conciliation has failed at the CCMA.
During the Conciliation and the Con-Arb process the Commissioner has the power to award the employee a maximum amount not exceeding twenty-four months remuneration in cases of automatically unfair dismissal or a maximum amount not exceeding not exceeding twelve months remuneration in cases of unfair dismissal.
CRS Technologies advises the market to always evaluate the precise nature and circumstances of each case against the criteria as laid out by the CCMA, prior to immediate engagement.
“This will eliminate a great deal of frustration on all sides and help to streamline what are often complex, tough and drawn-out processes,” Myburgh comments.