Tag Archive: Budget2012


Do we really know the extent of government debt? South Africa’s debt to GDP ratio as listed by Eurostat is 34%. However if you include parastatal debt (the likes of Escom, Transnet, Denel etc) it is said to be more like 70%. Above 60% requires real caution so as not to fall into a debt trap. We are still in great shape when you consider Greece whose most recent round of debt restructuring was to bring its debt to GDP ratio down to 120%.

- Rob Wilkie, CFO Softline and Sage AAMEA

By Karen Schmikl, Legislation Manager at Softline VIP, part of the Sage Group plc.

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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 medical aids. 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.

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

The changes lined out in Finance Minister, Praveen 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.

“The budget speech provided for a few uninspiring tax incentives for small business. But are tax incentives what small business really needs? I would argue that quality infrastructure, less red tape and admin burden and access to finance are far more important. Small business would also like to see local government award contracts fairly; and those lucky enough to win a contract still face the challenge of getting paid on time. As the growth engine for our economy, we need small business. I guess the fundamental question then is how do you start a business without some sort of decent education?”

- Rob Wilkie, CFO Softline and Sage AAMEA