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Budget: a series of significant changes
payroll systems
A SERIES OF SIGNIFICANT CHANGES AFOOT
Quite a few changes were made during Finance Minister, Pravin Gordhan's Budget Speech on Wednesday, 22 February 2012 that will have a direct impact on payroll administrators across South Africa.
Medical Aid
The most noteworthy is a change in the taxation of medical aid contributions from March 2012. Payroll administrators will have to ensure that their payroll systems are updated as from 1 March 2012 to reflect the changes stipulated. Not implementing these changes in the first period of the new tax year will result in incorrect PAYE, SDL and UIF contributions.
Medical tax credits replace the medical aid cap amounts used over the past few years.
- Individuals who are 65 years and older still have the benefit of a medical aid tax deductible deduction, subject to no limit.
- Employees who are younger than 65 however, no longer have the benefit of a medical aid tax deductible deduction. They do however qualify for a monthly medical tax credit (MTC).
- The MTC will be deducted from the tax calculated for the employee for each month the employee contributes to a medical scheme, reducing the employee's tax due each month.
- The MTC is calculated in relation to the number of beneficiaries on the medical aid - the values are R230 for the main member, R230 for the first dependent and R154 for each additional dependent.
The result of this change is a more equitable benefit for all individuals who belong to a medical aid. Lower income employees will ‘see' a greater tax benefit than higher income employees when comparing February and March tax amounts.
Tax Tables
The tax tables for individuals and special trusts for the year ending 28 February 2013 were updated.
|
Taxable Income (R) |
Rate of Tax (R) |
|
0 - 160 000 |
18% of taxable income |
|
160 001 - 250 000 |
28 800 + 25% of taxable income above 160 000 |
|
250 001 - 346 000 |
51 300 + 30% of taxable income above 250 000 |
|
346 001 - 484 000 |
80 100 + 35% of taxable income above 346 000 |
|
484 001 - 617 000 |
128 400 + 38% of taxable income above 484 000 |
|
617 001 and above |
178 940 + 40% of taxable income above 617 000 |
The tax rebate amounts have also been changed. The primary tax rebate amount has been adjusted to R11 440, while a secondary rebate for persons of 65 years and older is pegged at R6 390. A tertiary rebate for persons of 75 years and older is set at R2 130.
The adjustment to the tax threshold amounts, effectively nullified Standard Income Tax on Employees (SITE) limits. Below the age of 65, the tax threshold has been set at R63 556; ages 65 to below 75 now have a tax threshold of R99 056; while ages 75 and over have a tax threshold of R110 889.
Subsistence Allowance
An employee is entitled to receive a subsistence allowance when the employee is obliged to spend at least one night away from his or her usual place of residence. The value of the deemed allowance or advance where the accommodation is in the RSA has been amended to R303 per day for meals and incidental costs and R93 per day for incidental costs only. The schedule of rates for accommodation outside the RSA will be gazetted towards the end of the month.
Travel Allowance
Travel allowance costs have also been adjusted. The SARS deemed rate per kilometre increased from R3.05 to R3.16. The fuel and maintenance cost values have furthermore been amended and it is advisable to recalculate the value of all employee travel allowances from March 2012.
The changes lined out in Finance Minister, Pravin Gordhan's Budget Speech will have far-reaching effects on any payroll system. It is advisable for employers to take note of these changes and to confirm that they are being applied to their payroll system in order to keep the company current and up-to-date with legislation. asa
|
Value of the vehicle (incl. VAT) |
Fixed cost |
Fuel cost |
Maintenance cost |
|
(R) |
(R p.a.) |
(c/km) |
(c/km) |
|
0 - 60 000 |
19 492 |
73.7 |
25.7 |
|
60 001 - 120 000 |
38 726 |
77.6 |
29.0 |
|
120 001 - 180 000 |
52 594 |
81.5 |
32.3 |
|
180 001 - 240 000 |
66 440 |
89.6 |
36.9 |
|
240 001 - 300 000 |
79 185 |
102.7 |
45.2 |
|
300 001 - 360 000 |
91 873 |
117.1 |
53.7 |
|
360 001 - 420 000 |
105 809 |
119.3 |
65.2 |
|
420 001 - 480 000 |
119 683 |
133.6 |
68.3 |
|
exceeding 480 000 |
119 683 |
133.6 |
68.3 |
Author: Karen Schmikl is legislation manager at Softline VIP, part of the Sage Group plc.
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Latest Site Comments
Nice read, explains a lot. So in a nutshell, you are saying that a voluntary retrenchment is still a retrenchment and the severance received will be taxed as per the R 315K?
- George K - 2013/06/12 11:22:01 AM
Thanks for updates, i hope this will improve our designation in may ways.
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