It is that time of the year again and South African employers must comply with the Employer Reconciliation Process and submit an employer reconciliation declaration and an interim Employee Income Tax Certificate for the six-month period 1 March to 31 August 2018.

CRS Technologies, an established leader in HR and HCM services and solutions, advises clients to ensure that they adhere to all the requirements of the Income Tax Act and SARS regulations, specifically in terms of the Employer Reconciliation Process.

Employers must submit reconciliation declarations (EMP501) in respect of the EMP201 submitted, payments made and the IRP5/IT3(a)certificates for 1 March to 31 August (interim period) and 1 March to 28/29 February (annual full tax year period).

CRS Technologies says from a SARS perspective the Employer Reconciliation Process is part of the organisation’s modernisation and alignment process with international best practice.

“As SARS explains, the Employer Reconciliation Process has been updated to enable the employer to rectify their total payment declaration via the EMP501… it is part of the organisation’s vision to establish and enact a more accurate reconciliation process,” says Sandra Maritz, Legislation Business Consultant at CRS Technologies.

The company reiterates SARS’s directives and explains that employers are required to submit EMP501 declarations that reconcile the taxes collected from employees with the monies paid to SARS and the total tax value of employees’ income tax certificates, for the period under review.

“Tax season and compliance can be a daunting experience for employers. Our advice is to pay close attention to all the criteria for compliance, to tick each item on the checklist and pay close attention to any documents submitted for accuracy and completeness. This is the only way to ensure that the business is on the right side of SARS and to avoid penalties,” explains Maritz.

To help clients comply with SARS directives on Employer Reconciliation Process, CRS has introduced the following guide.

These are 8 steps that need to be kept in mind:-

  1. Employer reconciliation submissions must be made to SARS by the deadline, as prescribed in the Government Gazette. The Employer Interim Reconciliation submission period opened 17 September 2018 and closes on 31 October 2018.
  2. First determine the total income of employees for the year, and recalculate tax based on that amount
  3. Consider the differences (if any) in recalculated liability according to tax certificates compared to previously submitted EMP201 forms
  4. Keep a look out for pre-populated information and the accuracy thereof
  5. ETI or Employment Tax Incentive is important, and this question must be answered in full, and accurately
  6. Amounts declared must be verified… EMP501 must correlate with that of EMP201
  7. Total monthly payments (with regards to PAYE, SDL, and UIF) will be auto-calculated.
  8. Settling shortfalls reflected on reconciliation. Payments must be allocated to the period (s) in which the shortfall occurred.

CRS Technologies says these are just some of the steps that employers should take to ensure compliance.

The company has the expertise and market experience to assist companies.

Contact info@crs.co.za for more information.

OFFICIAL INTEREST RATE UNCHANGED

The monetary policy committee of the South African Reserve Bank has decided to keep the repo rate unchanged at 6.5%. The announcement was made on Thursday, 20 September.

For employers, the official interest rate applicable to payrolls is 7.5%.

The definition of “official interest rate” in the Seventh Schedule of the Income Tax Act means:

  • In the case of a loan which is denominated in the currency of the Republic, the South African repurchase (repo) rate + 100 basis points; or
  • In the case of a loan which is denominated in any other currency, the South African repurchase rate applicable in that currency +100 basis points.

Where a new repurchase rate or equivalent rate is determined, the new interest rate applies for the purposes of this definition from the first day of the month following the date on which that new repurchase rate or equivalent rate comes into operation.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2018 CRS Technologies (Pty)Ltd. All Rights Reserved.

We all know that silo thinking is the death of any organisation hence CRS always approaches its new product development as well as upgrades and refinements with a broad stroke. Embracing the concept of industry-based feedback and UX learning, over the next few months CRS will be introducing a series of top-level User Group Roundtable Discussions in which we are inviting our clients to have frank group discussions about a) their overall requirements, b) where CRS systems can be improved or new services integrated, and c) any trends coming down the line that we should be planning for as your HR and related IT partner. Specific roundtables will be dedicated to specific departments, e.g one for IT managers, one for Payroll, another for HR, etc. I’m really looking forward
to these sessions and openly engaging our clients in the development aspect of our business. We like to think we already have a good handle on your, the client’s, requirements and a real-time and long-term view of how our systems need to support your business, however this initiative is going to take our UX strategy to a new level. By getting closer to our clients, this opens up a number of opportunities to add further value and the roundtables also offer a more balanced platform for dialogue than the annual CRS conferences held in the past. If you would like to be invited, please drop me a line and I will try to include you in the relevant roundtable once we have the finer details in
place. You are also welcome to send me comments on mail which I can table for discussion in the relevant session.

Another exciting initiative in the pipeline is a new accredited online training academy. Initially this will cover training on the CRS modules but in time will expand into formalised blended training with full accreditation, offering certificates in areas such as HR and Payroll, much like any business school or learning institution. We’re still in the early planning stages and identifying the right education partner but suffice to say the CRS Academy will only reinforce our position as a total solution for all things HR and Payroll, and a skills development portal for those pursuing or considering it as a career. Food for thought if you are planning to further your education in 2019.

With regards to the Employment Tax Incentive (ETI), please note that the deadline has been extended to 28 February 2019. It was set to expire on 31 December 2016. While there is no certainty regarding the proposed five-year extension, it may still be worth your while to claim. CRS is one of the few Payroll providers that can calculate this correctly and has the resources and expertise to fulfil all requirements for employers. See below for more on this.

Lastly, I am pleased to announce that our website has just had a facelift. We hope you love the fresh look and easy navigation as much as we do! While you are admiring our website, please take note of our News Flash page too. We also email these news bites whenever there are important reporting dates or changes to note, or other things you need to know in the moment so they should be read, especially if they contain a Sars update. If you are not receiving these emails, please email Bernice Houston and she’ll add you to the list.

Have a great month
Ian McAlister
(ianm@crs.co.za)

Employers must understand the implications of illness, medical emergency, accident and other health-related issues and compliance.

Human Resources and Human Capital Management (HCM) specialists describe South Africa’s labour law as comprehensive in terms of management of employee incapacity – and failure by business to comply will have serious repercussions for any business, particularly when it comes to health-issues and the physical wellbeing of employees.

HR and HCM solutions provider CRS Technologies says key sets of legislation, including the Labour Relations Act (LRA), Occupational Health and Safety Act, and Employment Equity Act (EEA), are in place to help govern employee incapacity.

It is important to fully understand what it is that needs to be complied with says Nicol Myburgh, Head of HR business unit at CRS Technologies.

Myburgh explains there are two key components – incapacity caused by work related injuries and diseases, and incapacity not caused by work related injuries and diseases, but in jobs with very specific physical requirements.

“When looking at industries particularly susceptible to incapacity caused by work related injuries and diseases, we can look at the mining sector and companies working with harmful chemicals – they are highly susceptible. However, they are doing a lot to minimise the risk, specifically with reference to stringent safety regulations and compulsory PPE,” he explains.

With regards to incapacity not caused by work related injuries and diseases but in jobs with very specific physical requirements, CRS Technologies highlights companies with a high level of physical demands, specifically in the manufacturing industry.

“For instance, if someone is required to perform manual labour but has lost the use of one or more limbs, he or she will likely not be able to produce at the required level. This could be a big problem in the manufacturing industry because usually these employees are not qualified for office work and this makes reasonable accommodation extremely difficult,” Myburgh adds.

CRS Technologies attests that generally most decision makers understand the implications of the law and what compliance entails – and larger operations have specialised skills employed to manage the health and safety of staff.

But this does not apply to all businesses, and SMMEs (those specifically with 100 employees or less) simply cannot afford to appoint this type of specialist.

Whether they have this level of support available or not, they must comply with the law, and this is actually the crux of the matter Myburgh explains.

The extent to which compliance is expected is illustrated in the application of laws.

When it comes to the Occupational Health and Safety Act, in this context this Act holds reference to Occupational Injuries and Diseases, and the consequences of non-compliance to this Act has both a financial and criminal liability,

“For instance, if an occupational injury or disease is not reported to the compensation commissioner the employer may be held liable for all costs involved. This is not necessarily limited to medical costs, it extends to civil liabilities – for instance the loss of income an employee has suffered and will continue to do so,” says Myburgh.

Furthermore, regarding the Employment Equity Act, in this context the consequences of non-compliance to this Act are financially punitive to the Company.

The Act stipulates in Schedule 1 the maximum permissible fines that may be imposed for contravening this Act are as follows:

Maximum permissible fines if the Act is contravened, the greater amount of the penalty versus annual turnover will be the total penalty: –

Contraventions of the Act Fixed – Penalty – % of annual turnover

  • First Contravention – R 1,500,000 – 2%
  • Second Contravention – R 1,800,000 – 4%
  • Third Contravention – R 2,100,000 – 6%
  • Fourth Contravention – R 2,400,000 – 8%
  • Fifth Contravention – R 2,700,000 – 10%

The Department of Labour enforces this Act by sending inspectors to employers and they pay specific attention if complaints are received.

“The consequences of non-compliance to the Labour Relations Act have financial implications for the Company. This holds reference to the above-mentioned processes not being correctly followed and the employee lodges a dispute with the CCMA, the risk an employer runs going to the CCMA is the potential of being ordered to pay the employee up to 24-months salary as a settlement or even re-employment with or without backdated payments,” Myburgh explains.

While there is no certainty regarding the proposed five-year extension on the Employment Tax Incentive (ETI) programme (as directed by the 2018 Draft Taxation Laws Amendment Bill), companies will benefit financially from implementing ETI.

CRS Technologies offers the following guidelines:

ETI took effect from 1 January 2014 and was introduced as an incentive to encourage employers to hire young work seekers between the ages of 18 and 29.

It was set to expire on 31 December 2016. The Taxation Laws Amendment Act, 2016, extended the deadline for ETI to 28 February 2019.

HR and HCM services and solutions specialist CRS Technologies reminds employers that they can claim back on ETI depending on the value of the monthly remuneration.

The employer can claim the ETI and reduce the amount of Pay-As-You-Earn (PAYE) tax payable by the amount of the total ETI calculated in respect of all qualifying employees.

Other benefits include:

* It will reduce the employers cost of hiring young people through a cost-sharing mechanism with government, by allowing you to reduce the amount of Pay-As-You-Earn (PAYE) you pay while leaving the wage received by the employee unaffected. For example, employers who are registered for PAYE, and who employ a person for the full month of July 2018 and earns R2000, will get R1 000 off their monthly PAYE liability (provided that the employee is a qualifying employee based on all the other remaining requirements).

* The incentive amount differs based on the salary paid to each qualifying employee and whether the qualifying employee was employed after the inception of the ETI programme on 1 October 2013. So there is certain return on investment (ROI) for qualifying employees, but one of the reasons for business apprehension regarding the programme is because of the level of complexity in calculating cost and ROI regarding ETI.

There are also specific criteria covering qualification for employers and employees alike to the programme.

In order to qualify, the relevant employer must be registered for Employees’ Tax (PAYE), or must be eligible to register for PAYE. The employer can’t register just to claim ETI, other registration requirements must be met.

Certain employers are specifically excluded from the benefits of the ETI, even if they are registered employers for employees’ tax purposes. These employers are:

* The government of the Republic in the national, provincial or local sphere.

* A public entity that is listed in Schedule 2 or 3 of the Public Finance Management Act 1 of 1999, other than those public entities that the Minister may designate by notice in the Government Gazette on such conditions as the Minister may prescribe by regulation.

* A municipal entity.

Qualifying employers can also be disqualified by the Minister of Finance due to the displacement of an employee or by not meeting the conditions as may be prescribed by the Minister by regulation.

“CRS is one of the very few payrolls that can calculate this correctly and has the resources and expertise to fulfil all requirements for employers within its payroll system,” says Sandra Maritz, legislation business consultant at CRS Technologies.

 

OFFICIAL PUBLIC HOLIDAYS FOR 2019

The official Public Holidays for 2019 have been published on the South African Government website.

Employers making use of leave calendars on their payroll systems should update their calendars according to the table below.

* The dates indicated for Good Friday and Easter Sunday are determined according to the ecclesiastical moon. These dates vary each year between late March and late April.

** The Public Holidays Act (Act No 36 of 1994) determines when a public holiday falls on a Sunday; it shall be followed by a public holiday on the Monday after.

 

Contact our legislation team at info@crs.co.za if you require any additional information.

© 2018 CRS Technologies (Pty)Ltd. All Rights Reserved.

The Tax Laws (Amendment) Act No. 9 of 2018 gazetted on 25th July 2018

On 18 July 2018, Kenya’s President assented to the Tax Laws (Amendment) Act, 2018. Provisions regarding the Income Tax Act (ITA) (Cap 470) and Value Added Tax Act (VAT Act) (Cap 476) became effective retroactively on 1 July 2018.

Amendments to the VAT Act focus on the exemption of various supplies which were previously zero rated or standard rated. Exempt supplies are not subject to tax whereas zero-rated and standard-rated supplies are taxable at a rate of 0% and 16% respectively.

The amendments to the ITA increase the tax incentive on persons who are saving in registered Home Ownership Savings Plans (HOSP) towards home ownership while exempting the purchase of a house by a first time home owner from stamp duty. To encourage home ownership, it introduces affordable housing relief for individuals who have made an application under an affordable housing scheme. It also redefine “winnings” and reintroduce a withholding tax of 20% on winnings.

A new section, Affordable Housing Relief, was inserted, identifying the resident individual who will be entitled to a personal relief.

The amount of the affordable housing relief will be 15% of the individual’s gross employment income, to a maximum of Ksh. 108,000 per annum.

The amendments also permits a deduction against taxable income for deposits into registered HOSP by individuals who are not already home owners. The deduction has been increased from Ksh 48,000 per annum (Ksh 4,000 per month) to Ksh 96,000 per annum (Ksh 8,000 per month).

 

Contact our legislation team at info@crs.co.za if you require any additional information.

© 2018 CRS Technologies (Pty)Ltd. All Rights Reserved.

Leading HR and human capital management (HCM) solutions provider CRS Technologies is proud to announce its corporate partnership with the SA Board for People Practices (SABPP), South Africa’s foremost industry representative professional body established to champion the interests of HR professionals.

The SA Board for People Practices is the professional body for HR practitioners in South Africa, as well as quality assurance body for HR learning provision. SABPP was founded in 1982. In 2012, its status as a professional qualifications and standards body was entrenched after it secured recognition by the South African Qualifications Authority (SAQA). This paved the way for SABPP HR professional’s qualifications on the National Learner’s Record Database.

The role of SABPP is to professionalise the HR function to ensure HR becomes an increasingly recognised and respected profession. In pursuit of professionalising the HR function, SABPP has developed the National HR Competency Model, National HR Standards and established an HR Audit unit. In February 2015, the Minister of Justice approved SABPP register professionals as Commissioners of Oaths.

This means that members registered in the categories of Master HR Professional, Chartered HR Professional, HR Professional and HR Associate may now administer oaths and certify documents to be a true copy of the original.

Recently, SABPP, in collaboration with SAPA, developed a Professional Practice Standard (PPS) for Payroll. This was launched late in 2017 together with the Leadership Standard.

CRS Technologies is a natural choice to be the corporate partner of SABPP. The company is recognised as one of the leading HR and payroll integrated solutions providers in sub-Saharan Africa.

This technology-backed people-centric business is positioned at the edge of next-generation HR and payroll software and services solution integration and application.

Both HR and payroll administration and management have evolved as industries and affiliation with SABPP provides CRS with a unique opportunity to enrich, draw on and apply top industry skills and relevant standards.

“We are very pleased to be a member of SABPP, a body that encapsulates the progress HR has made, and continues to make, in South Africa. We know that we will add value to this organisation and our outlook, objectives and views are certainly aligned,” said Ian McAlister, General Manager of CRS Technologies.