DRAFT TAX ADMINISTRATION BILLS ISSUED

The draft Tax Amendment Bills were issued late this year on 16 August 2025 (they are normally issued in the last week of July), and they contain only one change that impacts on payroll systems.

The following Bills contain the tax proposals that were made in the Budget Reviews presented on 12 March 2025 and 21 May 2025.
The ‘Rates Bill’ was issued on 30 April 2025:
1.
Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill
This Act confirms the tax tables, rebates and threshold changes proposed in the 2024 Budget.
The following Tax Amendment Bills were issued on 16 August 2025:
•
Taxation Laws Amendment Bill
This Bill includes the substantive changes to the Income Tax Act proposed in the 2025 budget.
•
Tax Administration Laws Amendment Bill
This Bill includes the administration-related changes proposed in the 2025 budgets to the various Acts that are administered by SARS.
Remuneration Proxy
The only change for payrolls is to the definition of “Remuneration Proxy” that was inserted in section (1) of the Income Tax Act from 1 March 2014.
The term “remuneration proxy” is used in a variety of provisions where prior year remuneration is used as a proxy for the current year’s remuneration.
Commonly occurring payroll administration areas that make use of ‘remuneration proxy’ include:
•
The formula used to calculate the Residential Accommodation fringe benefit, and
•
In the case of a bursary granted for the studies of the relative of an employee, to check that the employee’s remuneration proxy is less than R600,000 pa before applying the exemption to the bursary fringe benefit.
The sections of the Income Tax Act that make use of the remuneration proxy are listed below:
•
Section 10(1)(q)(ii)(aa) of the Act for any bona fide scholarship or bursary granted by the employer to enable or assist any person to study;
•
Section 10(1)(qA)(ii)(aa) of the Act for any bona fide scholarship or bursary to enable any person living with a disability to study;
•
Paragraph 5(3A)(a) of the Seventh Schedule to the Act, which caters for the no-value provision regarding the cash equivalent for employer-provided accommodation (low-cost housing); and
•
Paragraph 9(3)(i) of the Seventh Schedule to the Act dealing with the rental value to be placed on employer-provided residential accommodation.
Reasons for change
Employees who qualified for a foreign employment income exemption under section 10(1)(o)(ii) of the Act in the previous year of assessment will have a reduced remuneration proxy in the current year of assessment, thereby creating “unintended tax advantages”.
Proposal
The draft amendment proposes that the definition of “remuneration proxy” is amended to include income that was exempt under section 10(1)(o)(ii) of the Act, effective from 1 March 2026.

VAT Modernisation project
The Tax Administration Laws Amendment Bill includes draft changes to facilitate the VAT Modernisation project.
While the changes necessary for this project don’t impact directly on payrolls, they do so indirectly because this project
has been introduced before the monthly tax certificate project.
The VAT Modernisation project forms part of a broader effort to transform tax processes, improve customer service
and engagement, reduce the VAT gap and streamline tax administration for VAT traders, businesses, and SARS.