Overview of the ETI Monthly Remuneration Change – Effective 1 March 2022
PAGSA Newsflash 2022-03 discussed the general changes made by the 2021 tax amendment Acts that were published on 19 January 2022 and indicated that there were two amendments that are more complicated and that the PAGSA has been following up to get clarity. We have today been given an opinion by SARS regarding the change to the definition of monthly remuneration in the Employment Tax Incentive Act that is effective from 1 March 2022. Due to the urgency to get this to payroll suppliers, this Newsflash gives you the proverbial bottom line, and the background detail will be discussed in a Newsflash to follow. Amendment
The definition of remuneration in the ETI Act has been amended by the insertion of the proviso. “monthly remuneration’—
(a) where an employer employs and pays remuneration to a qualifying employee for at least 160 hours in a month, means the amount paid or payable to the qualifying employee by the employer in respect of a month; or;
(b) where the employer employs a qualifying employee and pays remuneration to that employee for less than 160 hours in a month, means an amount calculated in terms of section 7(5):
Provided that in determining the remuneration paid or payable, an amount other than a cash payment that is due and payable to the employee after having accounted for deductions in terms of section 34(1)(b) of the Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997), must be disregarded;”
Application
Non-cash payments to employees are employer-paid contributions to third party organisations, as well as all taxable fringe benefits in terms of the Seventh Schedule of the Income Tax Act. These non-cash payments must be excluded from the calculation of ETI monthly remuneration from 1 March 2022. More Detail
There are some aspects of the broad guidance outlined above for the calculation of ETI monthly remuneration that is with SARS Legal for their opinion. As soon as feedback is received, another Newsflash will be issued. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
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