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JULY 2020 – SOUTH AFRICA

UIF TERS EXTENDED PERIOD

It is important that employers note the following:

Extension of COVID-19 relief payments to 15 August 2020

On 21 July 2020 the Employment and Labour Ministry announced an extension to the COVID-19 TERS relief payments.

Following the President’s announcement to extend the life of the Disaster Management Act until 15 August 2020, the decision was taken to similarly extend the UIF TERS benefits.

The benefit structure and existing criteria remain the same.

April, May and June applications will be closed at the end of July 2020. Valid applications already received for these months will be processed.

Employees who are put on leave, have been laid off temporarily, or whose employers cannot afford to pay their full salaries due to the coronavirus crisis, are entitled to the benefits.

The maximum amount an employee will receive is R6,730 a month (based on the threshold of R17,700), while the minimum amount is R3,500 a month.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2020 C
RS Technologies (Pty)Ltd. All Rights Reserved.

JULY 2020 – SOUTH AFRICA

UIF TERS INTRODUCES NEW MEASURES

It is important that employers note the following:

UIF TERS Bank Account Verification

To prevent companies from falling prey to criminal elements, the Unemployment Insurance Fund (UIF) has introduced new and stricter controls to verify banking details.

The fund has received numerous fraud complaints after it emerged that certain individuals managed to change their company’s banking details to their own.

The new rule requires applicants to insert either the enterprise number (CK/CIPC) or the ID number of the bank account holder in the TERS online portal, in order to further verify banking details against the authorised claimant.

This is critical to ensure banking details are verified before any TERS payment is authorised. Failure to do so will lead to more delays in the payment process.

Following the introduction of the new safety and security changes, the fund has had to delay payments. A turnaround time of two days is expected as the funds verifies and validates accounts to ensure that fraud at company level is reduced and eliminated as far as possible.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2020 C
RS Technologies (Pty)Ltd. All Rights Reserved.

JULY 2020 – SOUTH AFRICA

SARS INDIVIDUAL FILING SEASON

It is important that employers note the following:

Changes to the tax season for individuals

As a result of COVID-19 and the restrictions implemented, SARS has made changes to the 2020 filing season process.

A significant number of individual taxpayers will be auto-assessed in August

SARS will complete the tax returns for individuals once the required information has been obtained from employers, financial institutions, medical schemes, retirement annuity fund administrators and other third-party data providers.

SARS will then send a text message to the selected auto-assessed individuals and provide them with a proposed assessment without the need to file a tax return. If they accept the auto-assessment, any under or overpayment of tax will be processed as usual. Should the individual wish to edit the return, it can be filed on eFiling or the SARS MobiApp.

The individual income tax return filing dates are as follows:

  • 1 September to 16 November 2020 for taxpayers who file online.
  • 1 September to 22 October 2020 for taxpayers who cannot file electronically but do so at a SARS branch.  Please note this can be done by appointment only.
  • 1 September 2020 to 29 January 2021 for provisional taxpayers who file electronically.

Employees should make sure that they have received their IRP5/IT3(a)s and other tax documentation such as medical and retirement annuity fund certificates, as well as any other third-party data relevant to determining their tax obligations.

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2020 C
RS Technologies (Pty)Ltd. All Rights Reserved.

MARCH 2020 – SOUTH AFRICA

CRS TAX POCKET GUIDE 2020/2021

It is important that employers note the following:

Tax rates from 1 March 2020 to 28 February 2021

Note:

  • 80% of the travelling allowance must be included in the employee’s remuneration for the purposes of calculating PAYE (pay as you earn).
  • 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 logbook are used to determine the costs which may be claimed against a travelling allowance.

AA rate per kilometre

Where the reimbursed rate exceeds the prescribed rate of R3.98 (previously R3.61) cents per kilometre, irrespective of the business kilometres 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.

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.

Retirement fund lump sum benefits consist of lump sums from a pension, pension preservation, provident, provident preservation or retirement annuity fund on death, retirement or termination of employment due on attaining the age of 55 years, sickness, accident, injury, incapacity, redundancy or termination of the employer’s trade.

Severance benefits consist of lump sums from or by arrangement with an employer due to relinquishment, termination, loss, repudiation, cancellation or variation of a person’s office or employment.

Retirement fund contributions

Amounts contributed to pension, provident and retirement annuity funds during a year of assessment are deductible by members of those funds.

Amounts contributed by employers and taxed as fringe benefits are treated as contributions by the individual employees.

The deduction is limited to 27.5% of the greater of the amount of remuneration for PAYE purposes or taxable income (both excluding retirement fund lump sums and severance benefits).

The deduction is further limited to the lower of R350 000 or 27.5% of taxable income before the inclusion of a taxable capital gain. Any contributions exceeding the limitations are carried forward to the immediately following year of assessment and are deemed to be contributed in that following year.

The amounts carried forward are reduced by contributions set off against retirement fund lump sums and retirement annuities.

AA rate per kilometre

Where the reimbursed rate exceeds the prescribed rate of R3.98 (previously R3.61) cents per kilometre, irrespective of the business kilometres 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.

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.

Example: If an employee is reimbursed for 17 891 business kilometres travelled at R4.20 cents per kilometre and the prescribed rate is R3.98 cents per kilometre, the amount that will be included in remuneration for purposes of calculating the PAYE is calculated as (R4.20 cents – R3.98 cents) x 17 891. Based on this calculation an amount of R3 936 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 R3.98 cents per kilometre, irrespective of the total amount of business kilometres travelled.

Employer-owned vehicles

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 3.25% 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 logbook divided by the actual distance travelled during the tax year.
  • A further relief is available on assessment for the cost of licence, 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 logbook.

Donations

Deductions in respect of donations to certain public benefit organisations are limited to 10% of taxable income (excluding retirement fund lump sums and severance benefits). The amount of donations exceeding 10% of the taxable income is treated as a donation to qualifying public benefit organisations in the following tax year.

Dividends

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

Foreign dividends

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-free or low-interest loans

The difference between interest charged at the official rate (currently 7.25% p.a.) and the actual amount of interest charged is to be included in gross income.

Interest exemptions

Interest from a South African source earned by any natural person under 65 years of age, up to R23 800 p.a., and persons 65 and older, up to R34 500 p.a., 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.

Skills development levy

A skills development levy (SDL) 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

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

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

 

Contact our legislation team at info@crs.co.za if you require any additional information.
© 2020 C
RS Technologies (Pty)Ltd. All Rights Reserved.

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