Online submission of PAYE returns through the Integrated Tax Administration System (ITAS) Portal Following the press release issued by the Ministry of Finance early January 2019 to notify taxpayers of the online submission requirements pertaining to the new Integrated Tax Administration System (ITAS), another press release was issued on 19 April 2019.

The submission of monthly employee tax (PAYE) returns is expected to be lodged online, through the ITAS portal as from March 2019. The online submission is done by completing an Excel spreadsheet with detailed payroll information of employees and upload it on ITAS.

The Ministry was informed that some employers are not ready to submit their PAYE returns electronically due to the need to adjust their payroll systems in order to be compliant with the ITAS requirements.

It was agreed that affected employers may submit their monthly PAYE returns manually until September 2019. Thereafter no manual submissions for PAYE will be accepted.

Employers opting to submit their returns manually must take note that they are obliged to update all manual submissions by uploading electronic versions on ITAS by September 2019.

The deadline for submission and payment remains the 20th of every month.

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

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NHDF Implementation

As part of the Finance Act 2018, assented by Kenya’s President on 21 September 2018, the Employment Act 2007, was amended to introduce contributions to the National Housing Development Fund (NHDF).

The NHDF contributions were meant to come into effect 1 January 2019, however, it was temporarily suspended by the Labour Court, pending discussions between workers and the government.

On 16 April 2019, a public notice was published on the Kenya Revenue Authority website informing employees and employers that the Housing Fund Levy has come into effect.

Both the employer and the employee must each contribute 1.5% of the employee’s monthly basic salary.  The combined contribution is capped at KES 5,000 per month.  Voluntary contributions may also be made to the scheme at a minimum of KES 200 per month.  The first contribution will be due by 9th May 2019. Information relating to the payment process still to be communicated.

Every employer must register with the Housing Fund as a contributing employer and must also register his/her employees as members of the Housing Fund.

Despite the notice, the Federation of Kenya Employers’ (FKE) asked employers not to implement the policy as directed by the Housing ministry and the Kenya Revenue Authority.  The FKE attended court on April 8, 2019, and obtained an order suspending the implementation of the levy until May 20, when the case will be mentioned.  The FKE said the Gazette is therefore unlawful.

It is our recommendation that employers register the company and their employees with the Housing Fund and make the necessary adjustments to their payroll systems as heavy penalties could be inflicted.  Should the Housing Fund Levy be suspended for a further period, an update will be distributed.

 

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

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Namibia Budget Speech Highlights

The Minister of Finance, Hon. Calle Schlettwein, presented the 2019 Budget Speech to Parliament on 27 March 2019.

  • The budget deficit is estimated at N$8.2 billion or 4.1% of GDP and averaging 3.4% over the Medium Term Expenditure Framework (MTEF).
  • Inflation remains stable at 4.4% in February this year, after averaging 4.3% over 2018.
  • Total revenue for 2019/2020 is estimated at N$58.4 billion, 3.0% better than the estimated outturn for 2018/19 and 29.7% of GDP.
  • Expenditure as a proportion of GDP reduced from 42% to 34.9% in FY2018/19.
  • Old age pensions are increased by N$50 to a monthly grant of N$1300.

The main Tax proposals include:

  • Phasing out the current tax incentive for manufacturers and exporters of manufactured goods, repealing the Export Processing Zone and introducing the Special Economic Zones, with a sunset clause for current operators with the EPZ status.
  • Introducing a 10 percent dividend tax for dividends paid to residents.
  • Subject income derived from commercial activities of charitable, religious, educational and other types of institutions under Section 16 of the Income Tax Act to normal corporate tax requirements.
  • Taxing all income earned from foreign sources. Namibian residents will have to declare such income in their annual tax returns.
  • Increase the tax deductibility of retirement fund contributions from the current N$40,000 per annum to 27.5% of income with a maximum of N$150,000 to encourage savings and provisions for retirement.
  • Disallow deductibility of fees and interest paid to non-residents for calculating taxable income until payment of withholding tax paid is proven.
  • Remove VAT zero-rating on sugar.
  • Disallow deductibility of royalties for non-diamond mining entities.
  • No changes in personal or corporate tax rates proposed.

 

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

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Revision of the Tax Rates

An additional Personal Income Tax band of 35% for monthly income in excess of GHS10,000 was introduced during the Mid-year Budget Statement and came into effect 01 August 2018.

Following feedback from the public after the implementation of the new tax band, Government concluded that some relief from this tax measure is justified. Accordingly, Government reviewed this band to impact monthly income above GHS20,000 at a rate of 30%.  The Income Tax Amendment (No. 2) Act, 2018 (Act 979) has since been amended to revise the rates for the taxation of income of resident individuals.

The Income Tax Rates came into effect on 1 January 2019.

The flat rate tax applicable to income derived by non-resident individuals from Ghana remains at 25%.

 

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

© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

COID ROE Deadline extended

The Department of Labour has announced that the 2018/2019 ROE deadline has been extended to 31 May 2019. Submissions will open 1 April 2019.

The Compensation for Occupational Injuries and Diseases Act No 130 of 1993 (COIDA) provides for compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees during the course of their employment, or for death resulting from such injuries or diseases.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

BOTSWANA BUDGET SPEECH HIGHLIGHTS

The Minister of Finance and Economic Development, Hon. Kenneth Matambo, presented the 2019 Budget Speech to Parliament in February 2019.

The 2019/2020 budget proposals emphasize the need for Botswana to consolidate development gains for further economic development.

Key highlights:

  • Growth rates forecast are 4.5%, 4.2% and 4.8% in 2018, 2019 and 2020, respectively
  • The projected 2019/20 budget deficit is estimated at P7.34 billion representing minus 3.5% of GDP
  • The revised budget forecast for 2018/2019 is a deficit of P6.96 billion compared to the initial estimated deficit of P3.59 billion
  • The government has reviewed the Botswana International Financial Services Centre tax regime which led to the amendment of the Income Tax Act by Parliament in December last year
  • The Minister confirmed the publication of the Income Tax (Amendment) Act, 2018 – Act No.38 of 2018 amending the anti-avoidance provisions and introducing Transfer Pricing (TP) legislation. The effective date of the legislation is 1 July 2019
  • A Bill to amend the Transfer Duty Act will be presented to Parliament in March 2019
  • The Capital Transfer Tax Act will be amended to align it to the Transfer Duty Act

No changes to PAYE rates proposed.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

Date set for 2019 General Elections

Government Gazette 42250, Proclamation No. 8 of 2019 has been published on 26 February 2019, setting the date for the election of the National Assembly as 8 May 2019.

Employers making use of leave calendars on their payroll systems should update the calendar by adding 8 May 2019 as a public holiday.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

VIEW THE CRS DIGITAL TAX GUIDE HERE

Please notify us if you wish to receive a printed Tax Guide and the quantity you require.

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

© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

TAX RATES remains unchanged (Tax Year Ending 29 February 2020)

Individuals and Special Trusts

Tax Rebates

Tax Thresholds

Retirement fund lump sum withdrawal benefits (remains unchanged)

Retirement fund lump sum benefits or severance benefits (remains unchanged)

Subsistence Allowances and Advances

Where the employee is obliged to spend at least one night away from his or her usual place of residence on business and the accommodation to which that allowance, or advance relates is in the Republic of South Africa and the allowance or advance is granted to pay for: –

Where the accommodation to which that allowance or advance relates is outside the Republic of South Africa, a specific amount per country is deemed to have been expended.

Details of these amounts are published on the SARS website under Legal & Policy / Secondary Legislation / Income Tax Notices / 2019.

Travelling Allowance (remains unchanged)

Rates per kilometre, which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are determined by using the following table:

Note:

  • 80% of the travelling allowance 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.
  • No fuel cost may be claimed if the employee has not borne the full cost of fuel used in the vehicle and no maintenance cost may be claimed if the employee has not borne the full cost of maintaining the vehicle (e.g. if the vehicle is covered by a maintenance plan).
  • The fixed cost must be reduced on a pro-rata basis if the vehicle is used for business purposes for less than a full year.
  • The actual distance travelled during a tax year and the distance travelled for business purposes substantiated by a log book are used to determine the costs which may be claimed against a travelling allowance.

The actual distance travelled during a tax year and the distance travelled for business purposes substantiated by a log book are used to determine the costs which may be claimed against a travelling allowance.

Where an allowance or advance is based on the actual distance travelled by the employee for business purposes, no tax is payable on an allowance paid by an employer to an employee up to the rate of R3.61 cents per kilometre, regardless of the value of the vehicle. However, this alternative is not available if other compensation in the form of an allowance or reimbursement (other than for parking or toll fees) is received from the employer in respect of the vehicle.

AA Rate per kilometre (remains unchanged)

Where the reimbursed rate exceeds the prescribed rate of R3.61 cents per kilometre, irrespective of the business kilometers travelled, there is an inclusion in remuneration for PAYE purposes. The full inclusion amount is subject to PAYE, unlike the fixed travel allowance where only 80% of the amount is subject to PAYE.

Example: If an employee is reimbursed for 20 000 business kilometers travelled at R4.20 cents per kilometer and the prescribed rate is R3.61 cents per kilometer, the amount that will be included in remuneration for purposes of calculating the PAYE is calculated as (R4.20 cents – R3.61 cents) x 20 000. Based on this calculation an amount of R10 556 will be included in remuneration when PAYE is calculated. PAYE will therefore be withheld, on a payment basis, on the amount exceeding the prescribed rate of R3.61 cents per kilometer, irrespective of the total amount of business kilometers travelled.

Employer-owned vehicles (remains unchanged)

The taxable value is 3.5% of the determined value (the cash cost including VAT) per month of each vehicle.

Where the vehicle is–

  • The subject of a maintenance plan when the employer acquired the vehicle the taxable value is 25% of the determined value; or
  • Acquired by the employer under an operating lease the taxable value is the cost incurred by the employer under the operating lease plus the cost of fuel

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.

On assessment the fringe benefit for the tax year is reduced by the ratio of the distance travelled for business purposes substantiated by a log book divided by the actual distance travelled during the tax year.

A further relief is available on assessment for the cost of license, insurance, maintenance and fuel for private travel if the full cost thereof has been borne by the employee and if the distance travelled for private purposes is substantiated by a log book.

Interest-free or low-interest loans (remains unchanged)

The difference between interest charged at the official rate (currently 7.75% p.a.) and the actual amount of interest charged is to be included in gross income.

Medical Tax Credits (remains unchanged)

The medical credit which members of medical aid funds can claim against their tax liability has increased.

In determining tax payable, individuals are allowed to deduct medical scheme fees tax credit of:

  • R310 each for the individual who paid the contributions and the first dependent on the medical scheme; and
  • R209 for each additional dependent.

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 3 times 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 4 times 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).

Residential accommodation (remains unchanged)

The value of the fringe benefit to be included in gross income is the lower of the benefit calculated by applying a prescribed formula or the cost to the employer if the employer does not have full ownership of the accommodation. The formula will apply if the accommodation is owned by the employee, but it does not apply to holiday accommodation hired by the employer from non-associated Institutions.

Dividends (remains unchanged)

Dividends received by individuals from South African companies are generally exempt from income tax, but dividends tax at a rate of 20% is withheld by the entities paying the dividends to the individuals.

Foreign Dividends (remains unchanged)

Most foreign dividends received by individuals from foreign companies (shareholding of less than 10% in the foreign company) are taxable at a maximum effective rate of 20%. No deductions are allowed for expenditure to produce foreign dividends.

Interest Exemptions (remains unchanged)

  • Interest from a South African source earned by any natural person under 65 years of age, up to R23 800 per annum, and persons 65 and older, up to R34 500 per annum, is exempt from income tax.
  • Interest earned by non-residents who are physically absent from South Africa for at least 181 days during the 12 month period before the interest accrues and the debt from which the interest arises is not effectively connected to a fixed place of business in South Africa, is exempt from income tax.

Companies Tax (remains unchanged)

Value Added Tax (VAT) (remains unchanged)

VAT is levied at the standard rate of 15% on the supply of goods and services by registered vendors.

A vendor making taxable supplies of more than R1 million per annum must register for VAT. A vendor making taxable supplies of more than R50 000, but not more than R1 million per annum, may apply for voluntary registration. Certain supplies are subject to a zero rate or are exempt from VAT.

Skills Development Levy (remains unchanged)

Skills development levy is payable by employers at a rate of 1% of the total remuneration paid to employees. Employers paying annual remuneration of less than R500 000 are exempt from the payment of Skills Development Levies.

Unemployment Insurance Contributions (remains unchanged)

Unemployment insurance contributions are payable monthly by employers on the basis of a contribution of 1% by employers and 1% by employees, based on employees’ remuneration below a certain amount.

Employers not registered for PAYE or SDL purposes must pay the contributions to the Unemployment Insurance Commissioner.

SARS Interest Rates

Employment Tax Incentive (ETI)

In 2018, government extended the employment tax incentive by 10 years.

In addition, the eligible income bands will be adjusted upwards to partially cater for inflation. From 1 March 2019, employers will be able to claim the maximum value of R1 000 per month for employees earning up to R4 500 monthly, up from R4 000 previously. The incentive value will taper to zero at the maximum monthly income of R6 500.

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

© 2019 CRS Technologies (Pty)Ltd. All Rights Reserved.

South Africa 2019/2020 Budget Speech and important changes affecting payroll

The Minister of Finance, Tito Mboweni, has delivered the Budget Speech for the fiscal year 2019/2020 on 20 February 2019.

Highlights of the Budget Speech summarized:

  • The consolidated budget deficit is projected to narrow from 4.5% of GDP in 2019/20 to 4% in 2021/22
  • Gross debt is expected to stabilise at 60.2% of GDP in 2023/24
  • The economic and revenue outlook has deteriorated since the October 2018 Medium Term Budget Policy Statement and funding pressures from state-owned companies have increased
  • Baselines have been reduced by R50.3 billion, with about half of this amount relating to compensation. These reductions are offset by provisional allocations of R75.3 billion over the next three years, mainly for Eskom’s reconfiguration
  • The budget proposes tax increases of R15 billion in 2019/20 and R10 billion in 2020/21 relative to the 2018 Medium Term Budget Policy Statement (MTBPS) The additional revenue in 2019/20 will be raised primarily from limiting relief for the effects of inflation on personal income tax
  • From 1 April 2019, zero-rated VAT items will include white bread flour, cake flour and sanitary pads
  • Carbon Tax will be implemented on 1 June 2019
  • Excise duties on alcohol and tobacco products increase by between 7.4% and 9%
  • Fuel levy increases by 29c per litre
  • Visa requirements are being relaxed to make it easier for tourists to visit and invest in South Africa
  • The Government has allocated R567 billion for social grant payments. In 2019, the grant values will increase as follows:
    • R80 increase for old age, disability, war veterans and care dependency grants
    • R40 increase for the foster care grant to R1 000
    • The child support grant will increase to R420 in April and to R430 in October

 For Payroll:

  • No changes will be made to personal income tax brackets, while the tax-free threshold increases from R78 150 to R79 000. By not adjusting the income tax brackets for inflation, the government will raise R12.8 billion.
  • Medical tax credits have not changed
  • Employment Tax Incentive (ETI) eligible income bands increased
    • From 1 March 2019, employers will be able to claim the maximum value of R1 000 per month for employees earning up to R4 500 per month, up from R4 000 previously. The incentive value will taper to zero at the maximum monthly income of R6 500

Tax Rates from 1 March 2019 to 28 February 2020

Individuals and Special Trusts

Tax Rebates and Tax Thresholds

CRS Tax Pocket Guide for 2019-2020 with detailed information to follow,

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

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