The Taxation Laws Amendment Act, Tax Administration Laws Amendment Act, and Rates and Monetary Amounts and Amendment of Revenue Laws Act are the main tax amendment Acts for the 2022/23 tax year. These Acts were promulgated on 19 January 2022 and contain various changes to tax-related legislation.

Two changes not discussed in this newsflash are the extension to the reduction of the value of the ‘long services award’ and the change to the definition of ‘monthly remuneration’ in the Employment Tax Incentive Act. These changes are still under discussion, and more information will be provided once final clarity is obtained.

One of the general employment-related tax amendments relates to the fringe benefit for employer contributions to a retirement fund. Previously, employer-paid contributions to a retirement fund resulted in a taxable fringe benefit for employees. However, there was an anomaly when a retirement fund provided both defined contribution component retirement benefits and self-insured risk benefits. This resulted in the classification of the total contribution to the fund as a defined benefit component and the fund as a defined benefit fund. The fringe benefit was calculated using a prescribed formula.

To address this anomaly, the definitions in the Seventh Schedule paragraph 12D(1) have been amended. The changes include the definition of a ‘risk benefit’ and a ‘risk benefit policy’, as well as specifying that a defined contribution component can result from a risk benefit provided by a policy of insurance or a risk benefit policy. As a result, a retirement fund that provides both defined contribution component retirement benefits and self-insured risk benefits is now classified as a defined contribution fund. The fringe benefit is equal to the total employer-paid contribution, and the value of the risk premiums under self-insured risk benefits is determined based on the actual contribution made by the employer. These changes are effective from 1 March 2022.

Another tax amendment relates to the extension of the learnership tax incentive ‘sunset date’. The learnership tax incentive provides employers with an additional tax deduction for vocational training through formal learnership contracts. The incentive was introduced in 2001 and had a sunset date of 1 October 2011. However, it was extended to 1 October 2016 after a review showed its effectiveness. Another review conducted in 2016 recommended extending the incentive sunset date to 1 April 2022 and improving the targeting of the incentive. The completion of the SARS IT180 form was made compulsory for taxpayers to claim the learnership tax incentive.