Latest Entries »

It is difficult to find another role in today’s business world that has changed as rapidly as the Chief Information Officer (CIO). Only a few years ago, IT heads were there to make sure the basic infrastructure to keep a business communicating was in place and up and running. So while they do have to maintain current and past systems, their new most important role is to drive internal and external innovation. And because innovation is increasingly technology-driven, the CIO is in a perfect position to lead this evolutionary revolution.

Role Diversity

The role of the CIO over the past few years has become more diverse and challenging. CIOs now need to cover a whole lot more ground and stay on top of a rapidly changing field defined by quick shifts and advances in technology, and to incorporate these new methodologies and applications into business.

This fundamental shift in the role of the CIO reflects the changes business environments undergo on many different levels. The single most important factor in CIO recruitment is what new, innovative and efficient solutions they can bring to the company. In stark contrast to the old image of the CIO they are now supposed to ‘wow’ the board with amazing schemes to facilitate company growth,performance, efficiency and collaboration with full user adoption and experience.

Collaboration

Since technology and infrastructure investment have become a central focus, the CIO’s role is becoming more integrated into business process than ever before. In the past, it was the IT department that controlled technology and infrastructure purchase decisions. But with application usability needs such as cloud-based technologies, social media, the abundance of mobile devices, purchase decisions have become more collaborative.

Previously the focus for the CIO was delivering IT solutions and infrastructure, but with minimal collaboration between the IT and other departments across the organization. Now the primary focus is for the businesses and CIOs to work collaboratively and adapt and adopt useful technology with the C-suite firmly on board. Not to mention the need to embrace new employee demands with user-driven technologies, BYOD and social media. Employees are now demanding the usability and mobility in their professional devices that they have with their personal ones.

CIOs need to be a true business partner and support their counterparts in delivering results and differentiation; to help Sales grow the business, to help Engineering deliver a better product to the market, to help our Marketing teams drive new business acquisition.

Bimodal approach

With these fundamental changes to the CIO role and the requirement to deliver both basic IT for an organisation while preparing it for new challenges around big data, the Internet of Things, cloud computing and up-skilling workforces, it may require a “bimodal” approach to IT.

The first accountability will remain as a conventional IT role and manage risk and governance; and the second accountability will be more creative with the need for innovation, agility and new skills.

What is becoming clear is that the mounting challenges at the crossroads between technology and business innovation are leaving CIOs in need of the right tools to enable positive change for their companies.

So in today’s world CIOs need to be agile and innovative to support the growth and performance of the company, they need to adopt a more collaborative approach with their C-Suite colleagues as well as carry out the more traditional tasks around purchasing decisions, risk and governance. So the CIO’s role must shift from protecting and defending the status quo to embracing and extending new innovative capabilities, it needs to transform into the Chief Innovation Officer. In order for CIOs to survive in this ever changing and challenging role they need an Enterprise Resource Planning (ERP) solution. Of course it is not the ERP system in itself that provides the innovation, it is the possibilities it creates through the delivery of better business intelligence that enables better decision making.

 

For more information about ERP Solutions and the changing role of the CIO download our whitepaper: http://www.sageerpx3.com/landing-page-cio

Finance Minister Pravin Gordhan delivered his Budget Speech on 26 February, favouring consistency and steadiness over change and fireworks ahead of the national election on 7 May.

Some tax relief for tax payers in the 2014/15 Budget Speech – 40% of the tax relief was allocated to those who earn up to R250,000 per annum, meaning individuals earning more than R250,000 per annum will receive a little less of the allocated tax relief pool.

Though some commentators had speculated that high earners would need to pay higher income tax, the Minister left income tax rates untouched, says Madelein van der Watt, Development Manager at Sage Pastel Payroll & HR. The lowest tax bracket remains at a tax rate of 18% (annual taxable income up to R174,550) and the highest tax bracket remains taxable at 40% (annual taxable income of more than R673,100).

Tax credits for medical scheme contributions

Effective from 1 March 2012, the medical aid capping system was replaced with a tax credit – bringing in equality for all taxpayers under the age of 65 and improved benefits for lower earners.

In the new tax year, commencing 1 March 2014, monthly tax credits for medical scheme contributions (reduction of tax payable) have been marginally increased from:

  • R242 to R257 for the main member and the first dependent on a medical scheme
  • R162 to R172 for each additional beneficiary on the medical scheme

The medical aid tax credit system allows a reduction on income tax and does not reduce taxable earnings as the medical aid deduction system allowed in the past.

“The credit system is a more fair approach to providing tax relief as each individual contributing towards a medical aid fund will receive equal relief as it is not based on annual earnings. Whether an individual earns R250,000 per annum or R2,500,000 per annum, the income tax liability will be reduced by R257 for each of these individuals with at least a single beneficiary on the medical aid fund.”

From the 2014/15 tax year, medical aid contributions by people older than 65 will also be subject to the medical aid tax credit system. Up until now, those contributions were fully tax deductible. Effective from 1 March 2014, their contributions will also be subject to the medical aid tax credit system.

Is it a fringe benefit?

The company contribution towards an employee’s medical aid yields a taxable fringe benefit.

Generally, any payment made by an employer on an employee’s behalf, must be included in an individual’s taxable remuneration, before calculating the final PAYE deduction. Only pension and provident fund contributions are still exempt from the rule until 1 March 2015.

Regardless of an employee’s age or employment contract conditions, the medical aid contributed by an employer, whether in cash or as a package component directly to the fund, must be treated as a taxable fringe benefit.

The contribution paid by the employer will be subject to employee’s tax and contrary to popular belief, there is no way to structure a salary package to bypass the fringe benefit.

During the 2012/13 year of assessment, 76% of all fringe benefits reported on tax certificates were medical aid contributions made by employers on behalf of their employees.

Medical Aid Contributions must be reported on the employee’s tax certificate

As part of the Employer Filing season, each company is responsible to issue their respective employees with a tax certificate.

Medical Aid Contributions, both the employee and employer contributions must reflect on the employees tax certificate (IRP5/IT3A). If you’re making use of an automated payroll system, the codes are already loaded for you. In addition, a company is making use of an automated payroll system, they can import a payroll file with all the filing requirements directly into the e@syFile™ Employer system and the payroll EMP501 Reconciliation Report to complete the PAYE, SDL and UIF reconciliations. Van der Watt points out that this saves businesses considerable time and cost compared to manual calculation and capturing.

If you’re making use of a manual payroll system or payroll spreadsheets, please make use of the following codes:

  • Source code 4005 for employee and employer contributions
  • Source code 3810 for the taxable fringe benefit equivalent of the employer’s contribution
  • Source code 4116 for tax credits allowed

How can an automated payroll system make your business life easier?

To calculate the correct employee’s tax effect of a medical aid contribution, an employer must take the following into account:

  1. What is the total contribution that must be processed every month?
  2. How much of the contribution must be deducted from the employee’s gross income and how much is payable by the employer?
  3. Is the employer’s payment made as a cash contribution to the employee or paid directly to the medical aid?
  4. Remember to include any employer payment as a taxable fringe benefit when calculating the PAYE deduction for the month.
  5. How many dependents belong to the employee’s medical aid?
  6. Remember to constantly keep track of new dependents added or dependents removed from the medical aid policy.
  7. Remember to check for any contribution increases or change in medical aid cover that might affect the contribution value processed on the payroll.
  8. Don’t forget to calculate the medical aid tax credit after you have determined PAYE based on taxable earnings. The tax credit is based on the number of dependents and must reduce the PAYE value before you calculate the net pay.
  9. Every six months, you need to submit a PAYE reconciliation to SARS detailing the contributions, fringe benefits and tax credits related to medical aid contributions.

Payroll software will take care of the calculations and reporting of medical aid contributions and the PAYE effect thereof.

It is also important to keep in mind that effective 1 March 2014, employees aged 65 and older are also included in the medical aid tax credit system and their contributions may no longer be allowed as tax deductions. If you still make use of spreadsheet or manual methods of calculating PAYE, it is important to adjust your calculations to not only cater for new medical aid tax credits for the 2014/15 tax year, but also to keep in mind that you need to adjust the calculation for your employees aged 65 and older.

“Our software is designed to make your business life so much easier, so that you can focus on running your business. Let automated payroll solutions take care of the six major payroll acts and the ever-changing legislative plethora that governs payroll,” says Sumay Dippenaar, Marketing Manager at Sage Pastel Payroll & HR.

“There is no reason for businesses to rely on manual payroll spreadsheets since we offer automated solutions that are easy-to-use, smart and affordable, whether you deploy them on the desktop or in the cloud. Our subscription-based payroll solution allows you to pay low monthly fees with no upfront capital outlay, keeping your cash flow in mind.” With an online payroll solution, you only pay per payslip that you process. This pay-as-you-go model is cost-effective at R18 excluding VAT per payslip.

Example

Mr Jim Hardens is 67 years old, he earns a basic salary of R15,000 per month and the company contributes the full medical aid contribution of R1,000 on his behalf. He is the only member on his medical aid.

Below, please see how the calculation differs for tax year 2013/14 and 2014/15. Seeing that Jim is over 65 years, he also needs to be taxed on the medical tax credit system, effective 1 March 2014. Jim will enjoy a tax saving of R143.04 in the new tax year.

TAX YEAR 2014/2015
SALARY R 15 000
ADD MEDICAL AID FRINGE BENEFIT R 15 000 + R1 000 = R16 000
ANNUALISES TAXABLE INCOME R 16 000 * 12  = R192 000
TAX AS PER SARS TABLES R 192 000 – R 174 550 = R 17 450 * 25% + R 31 419 = R35 781.50
LESS PRIMARY REBATE R 35 781.50 – R 12 726 = R 23 055.50
LESS SECONDARY REBATE (FOR EMPLOYEES OVER 65 YRS) R 23 055.50 – R 7 110 = R 15 945.55
DEANNUALISE R 15 945.55/12 = R 1 328.79
LESS MEDICAL AID TAX CREDITS R 1 328.79 – R257
PAYE FOR THE MONTH R 1 071.79
TAX YEAR 2013/2014
SALARY R 15 000
ADD MEDICAL AID FRINGE BENEFIT R 15 000 + R 1 000 = R 16 000
LESS TOTAL MEDICAL CONTRIBUTION R 16 000 – R 1 000 = R 15 000
ANNUALISES TAXABLE INCOME R 15 000 * 12 =  R 180 000
TAX AS PER SARS TABLES R 180 000 – R 165 600 = R 14 400* 25% + R 29 808 = R 33 408
LESS PRIMARY REBATE R 33 408 – R 12 080 = R 21 328
LESS SECONDARY REBATE (FOR EMPLOYEES OVER 65 YRS) R 21 328 – R6 750 = R 14 578
DEANNUALISE R 14 578 / 12
PAYE FOR THE MONTH R 1 214.83
TOTAL SAVING R 143.04

 

Nifty Quick Links and Tools

>FREE Salary Tax Calculator

>FREE Online Logbook

>FREE Tax Guide

>Attend a Budget Speech Seminar, everything explained in laymen’s terms

>New Tax Rates

>Everything else you need to know

>Automate your payroll using an online solution 

For the latest legislative news, connect with Sage Pastel Payroll & HR on Twitter (Payroll News), Facebook or LinkedIn. To read more about the upcoming budget speech, click here.

Madelein van der Watt, development manager at Sage Pastel Payroll & HR.

Madelein van der Watt, development manager at Sage Pastel Payroll & HR.

Finance Minister Pravin Gordhan delivered no surprises in his Budget Speech on 26 February, favouring consistency and steadiness over change and fireworks ahead of the national election on 7 May. His Budget Speech once again put job creation, infrastructure development, social spending and education right on top of the nation’s list of priorities.

Taxpayers will benefit from R9,25 billion in personal income tax relief in the new tax year, though this relief hardly caters for the effects of inflation, says Madelein van der Watt, Development Manager at Sage Pastel Payroll & HR.  40% of the tax relief was allocated to those who earn up to R250,000 per annum, meaning individuals earning more than R250,000 per annum will receive a little less of the allocated tax relief pool.

Personal income tax brackets and rebates

Personal income tax brackets and rebates have been slightly adjusted. The amount an individual can earn before being required to pay income tax has been increased for the 2014/15 tax year:

  • Increase from R67,111 to R70, 700 for individuals below the age of 65
  • Increase from R104,611 to R110, 200 for individuals between the ages of 65 to  below 75
  • Increase from R117,111 to R123, 350 for individuals over 75 years

Individuals aged 65 and older will pay less tax due to an increase in the secondary rebate. The tertiary rebate for individuals aged 75 or older has also been increased which means less tax payable by the elderly from 01 March 2014.

The annual tax rebates for individuals have been increased as follows:

  • Under the age of 65 increased from R12,080 to R12, 726
  • Aged 65 to 75 increased from R6,750 to R7, 110
  • Aged 75 and older increased from  R2,250 to R2, 367

Though some commentators had speculated that high earners would need to pay higher income tax, the Minister left income tax rates untouched, says Van der Watt. The lowest tax bracket remains at a tax rate of 18% (annual taxable income up to R174, 550) and the highest tax bracket remains taxable at 40% (annual taxable income of more than R673, 100).

Tax credits for medical scheme contributions

Effective from 1 March 2012, the medical aid capping system was replaced with a tax credit – bringing in equality for all taxpayers under the age of 65 and improved benefits for lower earners. Monthly tax credits for medical scheme contributions (reduction of tax payable) have been marginally increased from:

  • R242 to R257 for the main member and the first dependent on a medical scheme
  • R162 to R172 for each additional beneficiary on the medical scheme

The medical aid tax credit system allows a reduction on income tax and does not reduce taxable earnings as the medical aid deduction system allowed in the past. The credit system is a more fair approach to providing tax relief as each individual contributing towards a medical aid fund will receive equal relief as it is not based on annual earnings. Whether an individual earns R250,000 per annum or R2,500,000 per annum, the income tax liability will be reduced by R257 for each of these individuals with at least a single beneficiary on the medical aid fund.

From the 2014/2015 tax year, medical aid contributions by people older than 65 will also be subject to the medical aid tax credit system. Up until now, those contributions were fully tax deductible.

Fuel levies & subsistence allowances

The general fuel levy and the Road Accident Fund levy will increase by 12c per litre and 8c per litre respectively by 2 April 2014. This will push up the general fuel levy on petrol to R2.25 per litre and R2.10 per litre of diesel. Subsistence allowances paid to employees who travel for business within South Africa, will be tax-free provided the amount paid for meals and incidental costs does not exceed R335 per day. An amount not exceeding R103 per day for incidental costs will also be exempt.

Any good news for SMEs?

Van der Watt says that SMEs could benefit from a recommendation made by the Davis Tax Committee to introduce a tax compliance rebate that replaces the current progressive tax rate structure for income tax on companies. “Minister Gordhan’s speech indicated that he is looking at ways to reduce red tape for small businesses by amending the turnover tax regime and replacing the graduated tax structure for small businesses with refundable tax compliance credits,” she adds.

Youth subsidy and spending

Government will be collecting around R1.02 trillion in tax revenues for the 2014/15 tax year, but how will that money be spent? Mindful of the country’s budget deficit, Minister Gordhan plans to increase real non-interest spending by only 1.9% over the next three years.

Sage Pastel Payroll & HR correctly predicted that the lion’s share of revenue allocation during this year’s budget announcement would go to health services, education and social grants. Minister Gordhan allocated R254 billion for education, R146 billion for healthcare, R143 billion allocated to build new homes and improve basic infrastructure in communities.  Social grant expenditure has risen to R118 billion this year.

The Minister also provided feedback about the Employment Tax Incentive in his speech. The Minister mentioned that already in the first month of implementing the subsidy – aimed at increasing employment for the youth – about 56,000 beneficiaries were recorded.

What’s next?

Though Minister Gordhan’s Budget Speech was conservative, South Africans might see more radical changes to the tax system when he or his successor delivers the Medium Term Budget Policy Statement in October. The Tax Review Committee led by Judge Denis Davis has started wide-ranging investigations into South Africa’s tax system, including a focus on value-added tax, mining taxes and wealth taxes.

In addition, Government will soon publish its National Health Insurance white paper, which may also impact on South African businesses and taxpayers.

Sage Pastel Payroll & HR assists SMEs

To assist SME businesses with the changes outlined in the new Budget, Sage Pastel Payroll & HR is incorporating all of the Budget changes to tax bracket values, medical aid benefits, and tax relief rebates. This will ensure that Sage Pastel Payroll & HR customers are immediately compliant when the new Budget stipulations take effect in the new tax year.  “With our automatic software updates, our customers will have the new year’s tax rates and calculations downloaded as soon as they open their software to process the first payslip run for March 2014,” says Van der Watt.

“We understand small and mid-sized businesses’ day-to-day challenges. Our software is designed to make your life so much easier so you have more time to do what you do best – grow your business,” says Sumay Dippenaar, Marketing Manager at Sage Pastel Payroll & HR.

“There is no reason for businesses to rely on manual payroll spreadsheets since we offer automated solutions that are easy-to-use, smart and affordable, whether you deploy them on the desktop or in the cloud. Our subscription-based payroll solution allows you to pay low monthly fees with no upfront capital outlay, keeping your cash flow in mind.” With an online payroll solution, you only pay per payslip that you process. This pay-as-you-go model is cost-effective at R18 excluding VAT per payslip.

For more information

For more help understanding what the Budget Speech will mean for you and your business – and a chance to win R10,000 – check out Sage Pastel Payroll & HR’s extensive set of online resources for Budget 2014/15:

>Competition: Stand a chance to win R10, 000

>Attend a Budget Speech Seminar, everything explained in laymen’s terms

>Free Salary Tax Calculator

>FREE Online Logbook

>FREE Tax Guide

>New Tax Rates

>Everything else you need to know

>Automate your payroll using an online solution 

For the latest legislative news, connect with Sage Pastel Payroll & HR on Twitter (Payroll News), Facebook or LinkedIn. To read more about the upcoming budget speech, click here.

Sage Pastel Payroll & HR is creating South Africa’s first-ever live infographic and you can win R10,000 by helping to build it. The infographic displays in real time what South Africans like you are expecting to see from Finance Minister Pravin Gordhan’s Budget Speech on 26 February.

To participate, simply answer 10 easy questions on the website and then watch as our infographic grows and changes as more South Africans take part. Everyone who answers the questions will be entered into the competition. You are able to earn additional entries into the competition by sharing the competition via Twitter, Facebook, LinkedIn or you can share via email to a friend or the person paying your salary.

On budget day, you will be able to follow us for all the Budget Speech updates as it happens, real-time. We’ll give you blow-by-blow Budget Speech updates, including the most popular conversations around the Budget Speech, most popular words and key phrases that are searched for on Google on the day and you can view all the live tweets relating to the Budget Speech announcement on 26 February.

But that’s not the only way Sage Pastel Payroll & HR will help you to make sense of this year’s Budget Speech. As Minister Gordhan is wrapping up his speech, the company’s tax wizards will be working to create a range of content that will help you understand what the Budget means for you as a tax payer and as a business owner.

The Sage Pastel Payroll & HR website will feature the sudget speech transcripts, supporting documents and a handy Tax Guide for the 2014/2015 tax year. There will also be a free updated salary tax calculator where you can enter your salary, relevant allowances and contributions to see whether you’ll pay more or less tax in the new tax year. You are able to download a free online travel logbook that is SARS compliant and that allows you to keep track of your travel claims throughout the year and view a summary at the end of the tax year. All you need to do is simply enter your kilometers travelled, destination details and rate of reimbursement, easy!

If you are responsible for running your company’s payroll, you could also benefit from Sage Pastel Payroll & HR’s tax seminars. Lastly, you can make use of the free 30-day trial period to test-drive our smart online payroll solution – this solution is easy and will ensure all the Budget Speech changes are taken care of for you, allowing you to work smartly and efficiently.

Says Sumay Dippenaar, Marketing Manager at Sage Pastel Payroll & HR: “Against the backdrop of a looming national election and a difficult global economy, this is certainly going to be an interesting Budget Speech to watch. Whatever emerges from Minister Gordhan’s speech, our tools and content will help you to understand what this year’s budget will mean for you as an employee or as the owner of a business.”

Madelein van der Watt, Development Manager at Sage Pastel Payroll & HR predicts that Minister Gordhan will not surprise the country with any new taxes and that he will continue to allocate most of the personal income tax relief to lower income earners and the elderly. Sin taxes on alcohol and tobacco products as well as fuel levies are likely to go up, as has become tradition. The lion’s share of revenue allocation during this year’s budget announcement should likely go to health services, education and social grants.

FFor the latest legislative news, connect with Sage Pastel Payroll & HR on Twitter (Payroll News), Facebook or LinkedIn.To read more about the upcoming Budget Speech, click here.

The Sage Insights 2014 conference provided inspiration to everybody part of the Sage ERP ecosystem. The annual conference was held at Champagne Sports Resort in the Drakensberg and attended by more than 250 Sage ERP Africa business partners, which included many partners from Southern, East and West Africa as well as the Middle East.

In his opening address, Jeremy Waterman, Managing Director of Sage ERP Africa and the Middle East said: “The key to being a successful business player in the ERP sector is realising the existence of major disruptive trends and ensuring solutions adapt accordingly. Whether you are business owner, software developer, or a sales person, disruptive technologies, such as cloud, mobile and connected services are a reality and applying its principles will make you one step ahead of the competition. You need to find a way to be disruptive or you will be disrupted.”

Waterman noted that 2013 had been a very busy year during which Sage had rebranded from Softline and established itself as the brand leader in the supply of effective business solutions to small and medium size businesses throughout the African continent. Their presence in East Africa is on the increase and they have established a significant foothold in West Africa with the opening of a Sage office in Lagos, Nigeria. Further to this, Sage ERP Africa has also assumed the management of the Middle East region during 2013.

Himanshu Palsule, Chief Technology Officer at Sage North America, focused his keynote address on the impact of mobility and cloud as disruptive forces in the market today, and how the Sage 300 ERP business was leveraging these as an opportunity in developing the product roadmap. “Our markets are transforming, the web and mobility have disrupted the value chain and we need to react responsibly to the disruption by investing in purposeful innovation. We need to give customers flexibility and choice and therefore our roadmap for the future will include a total reimagining of the product, focusing not only on mobility and cloud but also modernising the user interface for an improved customer experience. Sage ERP 300 has been chosen as one of the select small to medium business (SMB) products worldwide that Sage is investing in to effectively position it as a competitive force in the cloud.”

In the keynote delivered by Amanda Jobbins, Chief Marketing Officer for Sage, highlights of Sage’s Global Brand strategy, were shared. “At Sage we are on a new and exciting journey with the development of our brand in the minds of customers. We want to ensure consistency in our visual identity and ensure that customers recognise us a global leader and a partner that will give them the freedom and confidence to succeed.”

Keynotes were also delivered by Christophe Vanackere, Director of international operations at Sage ERP X3, on the seven exciting new strategies for Sage ERP X3 V7 to be released June 2014 and Tom Nolan, Head of Sage CRM, focused on the road ahead for Sage CRM and the integration with Sage 300 ERP as well as Sage ERP X3.

A strategic sales summary was delivered by Keith Fenner, Senior Vice President for Sales at Sage ERP Africa and Middle East. “Our excellent growth figures show that as a company we are disruptive and contribute in building the economy in Africa by being innovation partners for businesses. In going forward and ensuring that we keep a customer for life, it will be important to accelerate disruption by ensuring the development of relevant and modern solutions.”

Waterman concludes: “Sage Insights 2014 was the most exciting conference in many years because it focussed on what was actually being delivered now. The conference in 2013 defined the way forward for our three core products – Sage 300 ERP, Sage ERP X3 and Sage CRM in terms of meeting the challenges of cloud and mobility. This year it was all about the actual execution of these strategies. There are particularly exciting times lying ahead for us, our business partners and Industry Solution Vendors (ISV’s) as we work together to deliver disruptive solutions to the customer. The conference was an excellent opportunity for us to network, share information and very importantly, have some fun.”

Madelein van der Watt, development manager at Sage Pastel Payroll & HR.

Madelein van der Watt, development manager at Sage Pastel Payroll & HR.

In 2013 South African Revenue Services collected taxes amounting to R814-billion, an increase of 9.6 percent on total revenue received in 2012.

“More efficient collection systems and the deployment of online technologies such as SARS eFiling have simplified the collection process and made it easier for taxpayers to submit their returns on time,” says Madelein van der Watt, development manager at Sage Pastel Payroll & HR.

“The speed and convenience of using online technology has created a situation where 64% of the total revenue collected for 2012/2013 was received through internet payments.”

Van der Watt adds that the cost of collecting revenue is decreasing thanks to the high technology systems that were put in place as part of the SARS Modernisation Programme. Less human interaction is required as SARS is able to employ fewer people to complete assessments and instead, apply their skills more efficiently. The proof is clearly visible in the numbers supplied by National Treasury. In 2006, 98.8% of returns were paper-based. Today, less than 1% of taxpayers do not submit their returns electronically.

“South Africa boasts a progressive tax system in which the rich subsidise the poor with tax relief being applied in the lower income brackets. There are special rebates applying to individuals in the 65 and 70 age brackets, so elderly people pay less tax.

When Minister of Finance Pravin Gordhan presents the budget on 26 February 2014, we should see this trend continue and expect most of the personal income tax relief to be allocated to lower income earners and the elderly.

Based on the 2012/2013 assessment statistics, 76% of total fringe benefits reported included medical aid payments made by employers on behalf of their employees. A likely increase in the medical aid tax credits for the 2014/2015 tax year will therefore also create welcome relief to many individual tax payers. In addition, medical aid contributors who are aged 65 years and older will also benefit from the tax credit system effective 01 March 2014.

Although tax payers will be glad to put some extra money in their back pockets thanks to personal income tax relief that is most likely to be announced by the Minister of Finance, the relief will be short lived as we can also expect the usual suspects to hit our pockets hard after the budget announcement. “Sin taxes” on alcohol and tobacco products will more than likely be increased to ensure larger revenue collections. Expect an increase on the fuel levy as well and as a result, combined with the recent increase of the repo rate, consumers will have to spend more on their monthly grocery bill.

Minister of Finance Pravin Gordhan calls upon taxpayers every year for input on tax deductions and an area which has been open for debate over the past 3 years is that personal home security expenses should be allowed as a tax deduction due to the lack of service delivery from SAPS and the high occurrence of crime in our country.

To reduce the crime rate, we have to raise the rate of employment in South Africa. Van der Watt says the recent Employment Tax Incentive (ETI) initiative Gordhan introduced as part of the Wage Subsidy proposed in 2010 has been in effect since the beginning of January. The minister is expected to provide feedback in the budget speech on ETI’s expectations in increasing employment for young people aged 18 to 29 years. The legislation allows employers to claim a rebate on their PAYE liability provided their PAYE accounts with SARS are up to date.

The lion’s share of revenue allocation during this year’s budget announcement should likely go to health services, education and social grants. It will be interesting to see whether Eskom and Sanral will receive another round of government funding, especially since e-tolls are now generating revenue since December 2013 and Eskom were allowed a rate increase early last year.

Nifty links:

For more information on the changes that will be announced in the upcoming Budget Speech, on 26 February 2014, book your seat for the Seminar.

For the latest legislative news, connect with Sage Pastel Payroll & HR on Twitter (Payroll News), Facebook or LinkedIn. To read more about the Employment Tax Incentive Bill Seminar, click here.

Some of the major challenges facing small to medium enterprises (SMEs) in South Africa are limited sales, access to finance, managing cashflow and competition from large businesses.

Laurica Kok, general manager of Sage Pastel Payroll and HR, says the business arena is increasingly going mobile with Cloud computing and big data both structured and unstructured. This is driving payroll and HR industries to provide affordable and online solutions as well as self service and connected services offerings to businesses and business partners alike.

“Users will buy if they are given what they need. As business increasingly embraces mobile technology we endeavour to stimulate our business partners and their vendors to change their mindset and meet the mobility challenge head-on. Mobile solutions are in demand in the South African market.”

Kok adds that mobility, affordability and accessibility any time anywhere for business-to-business or business–to-consumer are the future and futurist applications are the way to make your personal and business life easy.

Connected Services enables SME companies to extend their desktop payroll with an online solution that eases the growing burden of HR managers and payroll administrators.

The solution includes a web-based self-service tool that enables employees to manage and maintain their own information online, thereby carrying some of the overall HR administration responsibility. They are able to make online applications for leave, loans, bursaries, travel claims, view their payslips and update personal information no matter where they are so long as they have an internet or smartphone connection.

At the click of a button the online applications of employees can be updated to the desktop application, providing a beneficial application for employees and business owners, payroll administrators and HR managers.

With connected services, the payroll desktop solution provides users with the best of both worlds (desktop and online), by making use of frictionless automated update technology. Frictionless updates enable traditional desktop applications to seamlessly update over the internet with minimal intervention from the end-user. Businesses no longer need to download and install updates from a website or use CD versions to manually update their software. The software now does it all for them, directly from their payroll software – as long as businesses have an active internet connection.

Another component of connected services is RSS Feeds. Payroll administrators, HR managers, business owners and business partners can view RSS Feeds directly on their desktop payroll system. This allows the business to receive information, notifying it of legislative and tax changes as well as new system software releases, ensuring the business stays on the right side of the law.

Sumay Dippenaar, marketing manager at Sage Pastel Payroll & HR, said a company’s logo is no longer its brand. “According to futurist Pieter Geldenhuys, customers and employees are the brand. It is all about credible recommendations. Consumers know an advertising message may not be accurate and is purely aimed at encouraging people to buy a product. Traditional media are likely to be seen as less credible advertising mediums. In a recent survey only 3% of respondents said the advertising message is seen as very accurate.”

It is important that business partners build their personal brand and use it as a vehicle to generate more sales. An affordable marketing discipline to build a business partner’s personal brand is public relations, complemented by general online visibility such as suitable social media platforms, to name but a few.”

Connect with us:

For the latest legislative news, connect with Sage Pastel Payroll & HR on Twitter (Payroll News), Facebook or LinkedIn.

View a short video on leave and bonus: http://www.youtube.com/watch?v=oGQ-mIHBHGk

The Employment Tax Incentive (ETI) initiative devised by the Minister of Finance as part of the Wage Subsidy proposed in 2010, is being promulgated and will become effective from 1 January 2014.

Developed with the objective of increasing employment for young people aged 18 to 29 years, the legislation will allow employers to claim a rebate on their PAYE liability provided their PAYE accounts with SARS are up to date.

Philip Meyer, technology director of payroll and HR software specialist Sage Pastel Payroll & HR says the ETI claim will be based on the remuneration of employees aged between 18 and 29 who were appointed on 1 October 2013 or later nd have a legitimate SA ID number or asylum seekers permit.

The calculation of the ETI claim may only be applied to a monthly salary or wage that is in line with the specific industry’s prescribed minimum wage rates.

“If the industry has no formal set minimum wage, then the qualifying employee needs to earn a minimum of R2 000 a month to be considered for the rebate calculation.

The incentive is calculated at a higher rate for the first 12 months after an employee qualifies. The maximum amount companies may claim per employee is R1 000 for each of the first 12 months,” said Meyer.

During the second 12 month period, the maximum claim is halved to R500 per month.

“However, an ETI claim based on remuneration exceeding R6 000 a month will have a zero incentive value.”

The first phase of the Employment Tax Incentive initiative will require employers to submit their first claims with their January PAYE return which is due on 7 February 2014.

To simplify the requirements and calculate an accurate claim, employers should approach the legislation as a 4 step process:

• The first step is to determine whether the employer is eligible to claim the incentive for the current month.
• Secondly, determine which employees qualify to be included in the claim.
• Step three is to calculate the amount to be claimed against PAYE for the month.
• The final step is to submit the ETI claim as part of the monthly PAYE return.

The amount of administration that is required for substantiating an ETI claim will place an additional burden on payroll administrators as SARS will require more detailed information if they decide to query your calculations prior to allowing your claim. It therefore makes sense to make use of automated solutions to apply the correct calculations and generate the required reports in the format SARS prescribes.

Employers must make use of the opportunity to benefit from the Employment Tax Incentive as the legislation is set to expire on 31 December 2016.”

For the latest legislative news, connect with Sage Pastel Payroll & HR on Twitter (Payroll News), Facebook or LinkedIn. To read more about the Employment Tax Incentive Bill Seminar, click here.

Local and globally aligned provider of secure online transaction processing services, Sage Pay, says the industry faces an “interesting period” over the next five to 10 years.

“A new set of entrepreneurs is emerging in South Africa,” says Sage Pay managing director Charles Pittaway. “People are moving online and younger businesses are more inclined to make use of the internet for their business solutions. It is a mindset and reflects what users are comfortable with.”

Pittaway adds that SMME businesses have limited resources for complex systems and seek to have all their business, payroll and accounting systems integrated to conduct their business through multiple platforms. He contends that Cloud computing and connected services have broadened the capability of standalone vertical products and are interacting with other services.

The new set of entrepreneurs seeks Cloud accessibility and Web mobility on the basis of cost effective subscription and ‘pay for what you use services’. “The new generation in business wants mobility, flexibility, time and cost savings. While SMEs tend to accept recommendations via word of mouth (for example, their accountants) they don’t really know how to differentiate between what will and won’t work for them.”

Pittaway sees the Cloud as the way forward, a fundamental shift that will see the Cloud becoming the absolute norm. “It is a natural movement as young entrepreneurs want their lives to be fully automated. There is a five to 10 year adaption gap between the average age of social media users and senior business people, however in the next few years there will be a major shift in that ratio.”

About Sage Pay

Sage Pay (previously Sage Netcash) provides payment solutions to small and medium-sized companies in South Africa. Salary and creditor payments, debit order collections or credit card gateway transactions are processed from 1 online account. Competitive transaction fees, and an easy to use online platform allows business owners to manage their business transactions from anywhere at any time. A full range of credit check and risk management services are also available from the Sage Pay account.

Sage Pay a wholly owned subsidiary of The Sage Group plc.

The Sage Group plc is a leading global provider of business management software to small and medium sized companies, creating greater freedom for them to succeed. Sage understands how and why each business is unique. We provide products and services that suit varying needs, are a pleasure to use and are secure and efficient. Formed in 1981, Sage was floated on the London Stock Exchange in 1989 and entered the FTSE 100 in 1999. Sage has over 6 million customers and more than 13,500 employees in 24 countries covering the UK & Ireland, mainland Europe, North America, South Africa, Australia, Asia and Brazil. For further information please visit www.sagesouthafrica.co.za and www.sage.com

“It is a daunting challenge for SME businesses to keep pace with regular legislative updates. However, automated payroll software ensures that the essential updates are automatically implemented and that payslip calculations are correct, meeting the latest legislative requirements,” adds Kok.

To help overcome this challenge, Kok says Sage Pastel Payroll & HR interprets legislative changes for start-up and small businesses and ensures that they remain compliant via payroll and HR software. RSS feeds provide information on and notification of legislative and tax changes as well delivering new system functionality releases that ensure companies always process their payrolls on the latest software version.

SMEs generally agree that excessive Government bureaucracy and Government handling of the country’s current economic challenges still top the list of the least favourable aspects of doing business.

The SBI established that globally business confidence is improving but in South Africa managing cash flow is the biggest challenge for growing businesses with government not helping as there remain 4.7-million unemployed, a lack of basic skills and protection of employed people while SME businesses battle with wage and payroll legislation.

Recognising the pressures on SME business in the current difficult economy, payroll and HR software specialist Sage Pastel Payroll & HR has introduced a payroll and HR software solution that businesses can obtain on an affordable subscription monthly payment plan.

SME business contributes significantly to the economic growth in South Africa so there is a need to harness entrepreneurial businesses and ensure that they succeed.

According to the SBI survey, South Africa is generally downbeat about local economic prospects with a low score of 44.10%, which is on a par with the UK and US at 40.65% and 41.53% respectively.

Mobility provides start-up businesses with agility and seeing as the owners are invariably busy managing many aspects of their business, Kok says Sage Pastel My Payroll Online is a lucrative online payroll solution for start-up companies. Online payroll solutions can be obtained on a ‘pay-as-you-go’ basis whereby businesses only pay when they use the system.

“It is important to provide South African companies with more than just a box of software,” says Sumay Dippenaar, marketing manager at Sage Pastel Payroll & HR. Telephone and email support services can assist users with payroll, legislation and process enquiries. “Businesses should opt for a payroll provider that offers a national footprint of certified payroll software installers to ensure they benefit from professional installation of their payroll and HR software solutions.”

For the latest legislative news, connect with Sage Pastel Payroll & HR on Twitter (Payroll News), Facebook or LinkedIn.