Tag Archive: sars


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.

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.

Softline Pastel, South Africa’s leading developer of business and accounting software, today launched a portal for its range of online applications. The platform, known as Sage Pastel Online, provides the entrepreneur on-the-go one central location to access the company’s bouquet of cloud-based business tools, making running a small business a little easier.

Pastel Accounting launched South Africa’s first online accounting program, My Business Online, in May 2009 and since then has brought several online innovations to the local SME market.

“Times have changed,” says Steven Cohen, managing director of Pastel Accounting. “We have entered an age where technology is pervasive, allowing us more mobility than ever – and business has to be part of the revolution to remain competitive.”

The portal can be found at www.sagepastelonline.com and offers online accounting, payroll and marketing services – allowing business owners the freedom to run their businesses at any time from anywhere. Additionally, Pastel’s BEE one-stop-information-hub, BEE123 and brand new free-to-all-users personal finance applications are also available in the same location.

Pastel My Business Online is a full-function accounting program, designed specifically for the small business owner. All accounting lingo has been changed to simple English, so even the layman can manage the business’s books. It’s a multi-user system with dashboards, graphs and drill-downs to source transactions that provide a bird’s eye view of the business. The system allows users to manage customers, suppliers and inventory items and keeps track of sales and purchases. It comes with a comprehensive list of reports so that month-end management packs are quick and easy to create.

Pastel My Payroll Online is a simple payroll solution that allows SME owners to pay their employees anywhere, anytime.  It’s a SARS compliant system aligned to even the most complex legislation, including PAYE and UIF. Users can also process leave online with leave types already defined according to the BCEA requirements. Like, My Business, My Payroll contains no confusing jargon.

Did you know 70% of SMEs don’t have a website, or at least one with limited marketing capabilities or integration with smartphones and social media. Pastel My Webspace is an online marketing engine for SMEs with an HTML5 website builder designed for optimal marketing and e-commerce capabilities. In addition My Brand will manage users’ search engine optimisation, and mobile and social media integration. My Brand effectively integrates everything for the user and provides an all-in-one e-marketing service with analytics, social media insights, and creating and mailing a fully dynamic newsletter with marketing feedback.

“Moving your business applications online is a must for anyone who wants to ensure that they remain at the cutting edge of service delivery,” said Cohen at the launch event that celebrated the mobile business of the future.

As part of Pastel’s drive for business mobility, it has also formed a relationship with Samsung Enterprise Mobility. Selected Samsung devices will now come preloaded with the My Business Online Android app and Pastel is a reseller of Samsung’s SIII, Note and Tablet devices; all preloaded with a year’s free access to Pastel My Business Online. The devices will be available for purchase via the Pastel Webstore.

The submission for manual tax returns has now passed. The deadlines for efiling submissions is the 23rd of November 2012 and in this post we’ll be exploring why it is sometimes necessary to seek out professional advice with your tax return.

There are many examples of incorrect tax returns which have ended in large sums of money being owed to the South African Revenue Service, and even court proceedings.  A recent article on the Moneyweb news website states that in one such case, the tax court in Pretoria had to consider an objection by a tax paying company against assessments issues by a SARS auditor. Of course, SARS had issued this assessment based on the tax return submitted by the company and their accompanying financial statements.

Despite many arguments from the company on if they were suitably qualified to be submitting tax returns on behalf of the business, and other issues, SARS won the case. The court ultimately found that the company had underpaid tax on several fronts and was now liable to pay the outstanding tax as well as the interest on the aforementioned amount.

This is just further proof as to why businesses, large and small, should seek the assistance of professional tax consultants when it comes to that time of the year. The help of a professional might cost far less that the penalties involved in an incorrect tax return.

SARS - SME companies should brace themselves for the interim PAYE reconciliation that is due from 01 September 2012 to 31 October 2012. Employers are required to fully reconcile and submit their employee tax certificates and EMP501 reconciliation for the period 01 March to 31 August 2012, by the end of October 2012.

Employers need to make use of the new SARS e@syFile software release, e@syFile V 6.1.0. to successfully submit their interim PAYE reconciliations. If they don’t, they will not be able to transfer their data electronically as the new software release will not recognise the old format.

“Companies have no choice,” says Philip Meyer, technology director of payroll and HR software developer Softline Pastel Payroll, part of the Softline Group and Sage Group plc.

Legislation dictates that each and every employee in a company must be registered on the SARS database with their own tax number. Therefore individual income tax reference numbers must be reflected in the interim PAYE reconciliation. If one or more tax certificates do not include the tax reference number, companies will receive an error notification in e@syFile and with effect from 01 September 2012 companies will be penalised.

“New legislation that took effect in March this year means that medical aid contributions are no longer allowed as a tax deduction for employees under the age of 65. The medical aid capped amounts have also been replaced with Medical Aid tax credits. If companies did not make use of the medical aid tax credit method, their submission will be rejected and they will be required to manually recapture the details on e@syFile”, adds Meyer.

A new IT3(a) reason code for tax certificates has been introduced by SARS for non-deduction of PAYE  and must be applied on interim tax certificates. Code 08 will indicate a zero PAYE liability due to medical aid tax credits applied. There are also new source codes for fringe benefits and tax deductions that must be applied to interim tax certificates, replacing the consolidated values SARS required prior to the 2012 tax year. Most automated payroll software systems already cater for these codes.

Companies can receive step-by-step assistance from a SARS Contact Centre agent with Help-You-eFile. Help-You-eFile is a new service innovation from SARS which gives companies access to SARS Contact Centre agents online.

For a smooth interim PAYE reconciliation, opt for a reputable payroll software solution that can automate the reconciliation process for the company. Some automated payroll software providers require that users only load their employees’ information and payslips. Therefore no manual calculations are requires and companies can simply upload the file to e@syFile.

For further assistance with the interim PAYE reconciliation season, companies can attend the SARS interim submissions seminar, hosted by Softline Pastel Payroll.  Make contact on +27 11 304 4390 or go to seminars@pastel.co.za

By Rob Cooper, Softline VIP payroll and legislative expert

Proposed changes to the Income Tax Act were issued for public comment in July 2012, some of which have a direct impact on employers and computerised payroll systems.

Rob Cooper

Rob Cooper

One change in particular constitutes a major shift in approach from the legislators, but first, a brief overview of the other changes.

Medical Tax Credit Principle to be Extended

From March 2012, we saw the introduction of medical tax credits (tax rebates) for employees under 65 years of age who contribute to a medical scheme.  Changes were also made to the income tax relief granted on assessment to individuals for their out-of-pocket medical expenses subject to certain conditions.

The draft changes now extend the medical tax credit principle for contributions to include those employees who are 65 years of age or older.  The values proposed for their tax credits are the same as those currently used for under 65 year old employees, and are based on the number of dependents.

Then the deduction system of income tax relief for out-of-pocket medical expenses has been replaced by a medical tax credit system, with varying degrees of relief for over and under 65 year old employees, and for those who are disabled or with a disabled spouse or child dependent.

What is of concern is that the tax relief granted for medical contributions and out-of-pocket medical expenses has been whittled away by the changes made last year and the proposed changes in the draft legislation, particular for those taxpayers who earn above the 30% marginal tax rate.

Individuals over the age of 65 and those who are pensioners in particular have been hit hard in recent years by dividend tax changes and interest tax relief amongst other measures.  A further reduction in the assistance from the state for medical contributions and medical expenses is going to hurt these individuals.

The same can be said for families with a disabled person – surely these individuals deserve more support, not less?

Employment-related Insurance Policies

The taxation of employer-owned insurance policies that impact on employees has been the subject of complex changes to the law over the past two tax years.  Just when it seemed that the dust had settled, the draft legislation proposes some more changes that are too complex and too confusing to discuss here.

The words “unintended consequences” again come to mind …

Learnerships

Some fine tuning has been made to the provisions which allow employers a deduction from income of R30 000 at the start and the end of a learnership.  These changes address the delays in registration of the learnership with a SETA which can reduce the value of the incentive, as well as the disallowance of the incentive will be limited to learnerships that the employee failed while working for the current employer.

Accrual of Variable Remuneration

One of the pillars that our tax law stands upon is the concept of ‘accrual’.

Amounts are generally interpreted to have accrued when there is an unconditional entitlement to that amount.  This causes problems for payroll systems that have to withhold employees’ tax on amounts that accrued in one tax year, but were only quantified and processed in the next tax year.  Adjustments to monthly payments to SARS, tax certificates and reconciliations are the inevitable result of adjusting amounts back into a tax year that has already closed.

In one of the most significant changes to employees’ tax requirements in decades, the accrual principle is proposed to be relaxed for variable remuneration items such as commissions, travel payments, overtime and bonuses.

At this early stage, much thought still has to be put into the practical implications of this change, but there is no doubt that it will significantly simply payroll administration over the tax year end for employers and for SARS and is to be welcomed.

Closing thoughts

Lastly, there are some items that have been proposed in the Budget by the Minister of Finance for a number of years and which, while still bubbling away, have not yet made their way into draft legislation.

These include the standardisation of taxation rules for retirement funds, and some changes to the Unemployment Insurance Legislation.

Unfortunately, the political football that the Youth Subsidy has become has been booted into touch, to be replaced by a Job Seeker grant system which has not even been discussed or quantified.