SARS PIT Modernisation Project – Update for All Members
Background
In a meeting in February 2020, SARS briefed the PAGSA on their plans for the SARS Vision 2024 PIT project. During 2021, the PAGSA compiled seven lengthy documents for SARS that outlined important aspects of payroll processing of employment taxes for the Vision 2024 team at SARS. The purpose of these documents was to give SARS a better understanding of various aspects of payroll administration, and we engaged with SARS in a number of meetings to explain the practical difficulties of processing PAYE, SDL, UIF, and ETI on a weekly, fortnightly, and monthly basis as opposed to a relatively simple tax year end process when all the figures are known and final. Meeting on 25th January 2023
The process was taken a step further in a meeting between SARS and the PAGSA on 25th January 2023 during which more detail was discussed. Since then, SARS has requested that the “SARS Vision 2024 PIT” project name that was used from February 2020, should be changed to “SARS PIT Modernisation”. ‘PIT’ is an abbreviation for ‘Personal Income Tax’ and is a generic term for various forms of taxes for individuals that includes PAYE, Provisional tax, and Income tax. It goes without saying that the changes to the administration of PAYE that will require payroll system development will have a direct impact on PAGSA payroll supplier members. Heads-up for Payroll Suppliers
At this stage, if the roll-out of the Vision 2024 PIT project (that includes monthly tax certificate submissions) proceeds as planned, then payroll suppliers must prepare themselves for significant changes to their payroll systems soon after the start of the 2023/24 tax year. You will be advised of progress as the project proceeds, and more detail will be issued to you as soon as it becomes available. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.

BCEA Earnings Threshold Increase and Comments
The Minister of Employment and Labour has announced that the BCEA (Basic Conditions of Employment Act) earnings threshold has been increased from R211 596,30 pa to R224 080,48 pa, an annual increase of R12 484,18 (about 6% pa). Note that the notice incorrectly states that the effective date of the increase is 1 March 2021 and will be re-issued to specify the correct effective date of 1 March 2022. Aspects of the application of the BCEA Earnings threshold are discussed below. BCEA – Application of the Earnings Threshold
The BCEA earnings threshold governs the sections of the BCEA that regulate the hours of work in various ways. Abbreviated, the notice states that:
“… all employees earning in excess of R224 080,48 per annum … [must] be excluded from sections 9, 10, 11, 12, 14, 15, 16, 17(2) and 18(3) [of the BCEA]”. This means that employees who earn more than the BCEA earnings threshold are not entitled to the automatic protection and rights provided by the following sections of the BCEA:
Section 9 (Ordinary hours of work)
Section 10 (Overtime)
Section 11 (Compressed working week)
Section 12 (Averaging of hours of work)
Section 14 (Meal intervals)
Section 15 (Daily and weekly rest period)
Section 16 (Pay for work on Sundays)
Section 17(2) (Night work)
Section 18(3) (Public holidays not ordinarily worked). In other words, only employees that earn below or equal to the BCEA threshold enjoy the protection of these sections of the BCEA, and for example, are entitled to overtime pay at a rate of 1.5 times the normal hourly wage rate. Employees that earn above the threshold are not entitled to the automatic protection of these sections. Again, a commonly occurring example is that of overtime – employees that work overtime are not automatically entitled to be paid overtime if they earn above the threshold. If the employer so wishes, the provisions of the BCEA that are not automatically provided can be included in the employment contract. Note that section 18(3) of the BCEA (public holidays that are not ordinarily worked), protects only those employees that earn below the BCEA threshold, whereas section 18(2) (public holidays that are ordinarily worked), protects all employees i.e. the earnings threshold is not applied to section 18(2). What is ‘BCEA Earnings’? The notice goes on to define ‘Earnings’ to be:
“… the regular annual remuneration before deductions, i.e. income tax, pension, medical and similar payments but excluding similar payments (contributions) made by the employer in respect of the employee: Provided that subsistence and transport allowances received, achievement awards and payments for overtime worked shall not be regarded as remuneration for the purpose of this notice.”
Aspects of the definition of remuneration in the notice that equates to BCEA earnings follow. “… Remuneration …”
The notice is issued in terms of section 6(3) of the BCEA, therefore the ‘remuneration’ that is used as the base amount for ‘earnings’ in the definition of “earnings” in the notice, is ‘BCEA remuneration’, defined to be:
“… any payment in money or in kind, … made … in return for that person working for any other person, …”
BCEA remuneration is a complex subject that is beyond the scope of this Newsflash. In short, excluded from BCEA remuneration are:
Allowances
Benefits that are not granted in return for ‘work done’ (in other words, benefits that are granted in return for ‘work done’ are BCEA remuneration). “… before deductions …”
This part of the definition specifies what could be termed ‘gross’ remuneration i.e. remuneration before deductions, but the wording starting from “but excluding” is clumsily drafted and easily misinterpreted. It is clear that remuneration is not reduced by employment taxes (PAYE, SDL and UIF), and employee-paid contributions to medical schemes, retirement funds, etc. What is not clear is that the wording following “but excluding” appears to specify that remuneration must also be reduced by employer-paid contributions to medical schemes, retirement funds etc.

Compensation Fund – Extension of the Deadline Date for ROE Submissions
The Compensation Fund notified the PAGSA today of the issue of Government Gazette No. 48673 dated 30 May 2023. There are other details in this Gazette that have been repeated from earlier notices and that have been queried previously by the PAGSA. At the time of writing, we are still waiting for a response from the Fund’s legal advisors. Points a) and b) in this latest notice are the important ones:
The first point finally clears up the uncertainty regarding the Compensation Fund Earnings Threshold for the 2023 year of assessment (2023/24) and confirms our understanding as published in PAGSA NF 2023-16 COID Earnings Threshold for 2023. The extension of the ROE Submission deadline date from 31 May to 30 June 2023 in the second point is self-explanatory, and probably results from the recent difficulties with certain aspects of the Fund’s IT systems that seem to have been resolved. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.

UIF E03 Specification Revision Project
Background
Employers, payroll suppliers, and the Unemployment Isurance Fund experienced many problems during the TERS period of 2020 and 2021, followed rapidly by more problems resulting from the surprise introduction of the Electronic Compliance Certificate system in January 2021 that was then temporarily withdrawn in April 2022. Despite many emails and attempts to discuss these problems during this period, communication with the Fund was not satisfactory. However I am happy to say that towards the end of 2022, the Unemployment Insurance Fund and the PAGSA agreed to re-establish regular meetings, and in a meeting held on 1 December 2022 this process was formalised. It was agreed that the regular meetings between the Fund and the PAGSA that we experienced over the past 25 years would be re-established and we have already had two meetings in January 2023. Revision of the E03 Specification
The purpose of these meetings is to revise the E03 specification document so that payrolls can provide the Fund with the additional employee data that the Fund needs to be able to record employee remuneration accurately under certain circumstances, and to issue E-Compliance Certificates correctly in certain scenarios. The Road Ahead
Two PAGSA task teams have been set up to research some problematic aspects of remuneration declaration, as well as investigating possible technical changes to Ufiling. You will be advised of progress as the investigation proceeds. In the meantime, it would be best to make provision in your payroll development schedule for the second half of 2023 for possible changes to the UIF E03 declaration specification. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.

Vision 2024 PAYE: Monthly Tax Certificate Submissions
Background
SARS Initial Briefing
On 12th February 2020 SARS briefed the PAGSA Exco members on the SARS intention to modernise the technical capability of their systems “where increasingly its work will be informed by data-driven insights, self-learning computers, artificial intelligence and interconnectivity of people and devices”. PAGSA Newsflash 2020-05 was issued to members with SARS permission on 24 February 2020 to provide PAGSA members with an early warning of what lay ahead. This newsflash can be referred to for more details of this initial meeting. The ‘Vision 2024 PAYE’ project as it was called was almost immediately hamstrung by the March 2020 Covid-19 lockdowns, the subsequent drafting and issue under extreme pressure of complex tax and ETI relief legislation, followed by the Civil Unrest period in July 2021 and a further round of tax and ETI relief legislation. The years that followed March 2020 were a very difficult and painful period for all parties and individuals in South Africa. Payroll Administration Investigation
On the resumption of the Vision 2024 PAYE project, the PAGSA investigated various areas of payroll administration, complied documents to describe these areas, and engaged with SARS in meetings to assist SARS to understand the practical implications and complications of weekly, fortnightly, and monthly payroll administration. These meetings highlighted the necessity to create a SARS Business Requirements Specification (BRS) that focused on the proposed modernised requirements. Budget 2023 Intention: Third-party data and personal income tax administration reform
The following is quoted verbatim from the February 2023 Budget Review:
The pay-as-you-earn (PAYE) and personal income tax administration reform announced in the 2020 Budget has given pensioners the option to agree to more accurate PAYE withholding rates to take account of multiple sources of income [Rob: this refers to Fourth Schedule paragraph 2(2B)], as well as enabling 2.9 million individual taxpayers to be automatically assessed without the need to file personal income tax returns. The reform will continue over the medium term with a view to reducing the administrative burden for employers, payroll administrators and SARS, as well as individual salaried taxpayers. Work has commenced, in consultation with employers and representative organisations, to provide employer and employee data on a monthly basis in a fully automated fashion. Over time, the need for employer PAYE annual reconciliation is expected to fall away, and the reform will be extended to third-party data providers. [my emphasis added to the above]
The wording highlighted above in the Budget’s statement of intention firstly puts the Vision 2024 PAYE project into the public domain, and secondly in simple terms can be translated as “monthly tax certificate submissions and related matters”. SARS PAYE BRS – Technical Requirements of Monthly Tax Certificate Submissions
During 2022 and 2023 to date, both SARS and the PAGSA Exco and Manco committees (and other third-party bulk suppliers of tax certificates such as BASA (the banking institutions) and ASISA (the retirement funds)), have spent a lot of time on the creation of a Monthly PAYE BRS that will inform both the SARS systems (e@syFile, eFiling, and the online system used in the SARS branches) and the payroll systems of PAGSA members of the technical requirements for monthly tax certificate creation and submissions. The initial impression one might have is that the move from the current bi-annual tax certificate submission process to a monthly tax certificate submission process does not appear to be a difficult one, but I can assure you that this is not an easy matter. Important Aspects of the Monthly PAYE BRS
Besides the details of the employer and employee demographic and financial fields (the majority of which remain the same as in the current bi-annual BRS), additional fields have been added. Also changed is the File Structure and the records that make up the file structure.

UIF Notice: Manual UI-19 Discontinued
The Unemployment Insurance Fund has today made available via their call center an undated notice that states that from 1 October 2022, all Gauteng Labour Centers will no longer accept manual UI-19 forms that update employee information, usually for the purposes of claiming a UIF benefit. The notice was not discussed with the PAGSA, can’t (at this stage) be found on the UIF website, and was sent to me today by one of our members. At the time of writing this Newsflash, the Fund has not yet replied to the urgent email sent by the PAGSA today to senior UIF officials querying the implementation of the requirements of this notice. UIF Notice: Page 1
The 2-page notice is of very poor quality and difficult to read. On page 1 it states:
The above sentence starting with “Every employer … in terms of subsection (1)” is copied from section 56(3) of the Unemployment Insurance Act. The words “all information” in the above sentence are confusing in that it is not certain what is being referred to. Is it the detailed information that is specified in the E03 specification that payrolls obey when creating the employee declaration file every month, or is it the subset of that information that is specified by regulation for the UI-19 form? The full section 56 is included in the appendix to this newsflash for your convenience. Quite how section 56 of the Unemployment Insurance Act empowers the UI “Management” that issued the notice to discontinue the manual UI-19 is uncertain, but more important is to determine what to do from 1 October 2022. Lastly, note the reference to “all Gauteng Labour Centers”. Again, one can only take the notice at its face value – Gauteng Labour Centers will no longer accept UI-19’s from 1 October 2022, but Labour Centers in the rest of the country will accept UI-19’s, at least for the foreseeable future. UIF Notice: Page 2
The second page of the notice contains a very poor copy of Chapter 1 of the ‘uFiling System User Guide’ containing three steps to assist employers to register for uFiling. This Guide can presumably be found on the Fund’s website. While this is not stated, one can only assume that the purpose of the UIF Notice is to notify all employers that are not registered for uFiling, to register as soon as possible (or at least prior to wanting to modify or update employee information by manual UI-19), as this facility will no longer be available. As soon as more information becomes available, you will be updated. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER. Annexure: Unemployment Insurance Act Section 56
56. Information to be supplied by employer.—
(1) Every employer must, as soon as it commences activities as an employer, provide the information referred to in subsection (2) regarding its employees to the Commissioner, irrespective of the earnings of such employees. (2) The information contemplated in subsection (1) must—
(a) include the street address of the business, and any of its branches, of the employer;
(b) if the employer is not resident in the Republic, or is a body corporate not registered in the Republic, include the particulars of the authorised person who is required to carry out the duties of the employer in terms of this Act; and
(c) include the names, identification numbers and monthly remuneration of each of its employees, and must state the address at which the employee is employed. (3) Every employer must, before the seventh day of each month, provide the Commissioner with all information for the previous month in terms of subsection (1). (3A) The Minister will issue regulations on a special dispensation applicable to domestic employers and small businesses or enterprises regarding the submission of information in subsection (3). (4) The Commissioner may request the employer to provide such additional particulars as may reasonably be required to give effect to the purpose of this Act within 30 days of the request, or within such extended period as the Commissioner may allow.

SARS Wage Negotiations Dispute and Imminent Industrial action
SARS has issued a letter to all its business associates explaining that they are in dispute on its 2022 wage negotiations process. It is expected that there would be a strike action, but that SARS has put contingency measures in place with regards to their service delivery. The letter is attached hereto for your convenience. Regards,
Rhona van Taak
Admin manager: Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER

Subsistence Overnight & Daily rates (March 2021 – February 2022)
The SARS Commissioner has published the “Daily amounts” where the employee is required to spend at least one night away from his/her usual place of residence, for purposes of Section 8(1)) of the Income Tax Act. The amounts published are —
RSA travel:
oR152 per day in respect of incidental costs only; and
oR493 per day in respect of meals and incidental costs. Outside RSA travel: No changes have been made to the rates and the rates which is in effect since 1 March 2019 is still applicable. A copy of this publication can be access by using the following link:
https://www.sars.gov.za/wp-content/uploads/Legal/SecLegis/LAPD-LSec-IT-GN-2022-02-GN1844-GG-46000-Budget-2022-Subsistence-Allowance-Rates-Overnight-Allowance-4-March-2022.pdf
The “Daily amount” for day trips has also been published and is R152 per day. A copy of this publication can be access by using the following link:
https://www.sars.gov.za/wp-content/uploads/Legal/SecLegis/LAPD-LSec-IT-GN-2022-01-GN1843-GG-46000-Budget-2022-Subsistence-Allowances-Rates-Day-Allowance-4-March-2022.pdf
A copy of this notice is included in the annexure to this newsflash. Regards,
Rhona van Taak
Admin Manager: Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER

Employment Equity – Miscellaneous Matters
The Employment Equity authorities are currently engaging the public in roadshows around the country. Their schedule is included in the annexure to this Newsletter, and they have invited PAGSA members to attend. Despite their busy schedule, they have assisted the PAGSA by updating us on progress and clarifying some areas of the Employment Equity requirements that are not clear. Employment Equity Amendment Bill -Status
This long-running amendment Bill was issued as a draft Bill in Gazette No. 41922 on 21 September 2018. The PAGSA commented on the proposed changes at that stage, and again when more changes were made to the Bill over the years, the latest of which was published in December 2021. The final Bill has now been approved by the National Council of Provinces and the National Assembly on 17 May 2022 but must still be promulgated (signed by the State President) and given an effective date before its requirements can be implemented. My understanding is that before an effective date can be announced, the new sectoral targets (see the next section) that have been under discussion for more than a year must be finalised (there are 18 financial sectors and only one of them had been finalised by September 2021). It stands to reason that the portion of the Bill that provides for sectoral targets cannot be implemented until the sectoral targets are issued in a Gazette that allows 30 days for comments and once finalised, are then published in a regulation. I assume that parts of the EEA2 will be revised and published for comments as part of the same process. There is no indication of when these processes will be completed but it is obvious that they will take some time. In my opinion, the most practical time to make these changes effective is from the start of October, the first day of the ‘Equity Year’ (the 12-month period that employers report on every year) for most employers, but there is no certainty on this. This would mean that the earliest starting date would be 1 October 2023. However, another factor is that there is a possibilty that the ‘Equity Year’ dates are revised (see the PAGSA proposal in the last section of this Newsflash). If our proposal is accepted and the ‘Equity Year’ dates are standardised, it would then make sense to align the effective date of the amendments with the starting date of the new ‘Equity Year’ as specified. Lastly, the PAGSA has made the Equity authorities aware that we need sufficient time in which to change payroll systems and to implement the changes at clients. Employment Equity Amendment Bill -Proposed Changes
Refer to PAGSA Newsflash 2019-55 for the details of the draft Bill at that stage, but there are two proposed changes that are repeated here because they are important for payroll suppliers:
1.The definition of a ‘designated employer’
2.The introduction of sectoral numerical targets. Keep in mind that these changes are included in the final Employment Equity Amendment Bill, but that the Bill has not yet been promulgated and made effective. As matters stand, the current law must still be complied with. Change to the definition of a Designated Employer
All employers must comply with the ‘Unfair Discrimination’ requirements of Chapter II of the EE Act, but only ‘designated employers’ as defined by the EE Act must comply with the ‘Affirmative Action’ requirements of Chapter III. Note that employers that in future will no longer be designated once the changes are made effective and that then do not have to comply with the ‘Affirmative Action’ requirements of Chapter III of the Employment Equity Act, must still comply with the ‘Unfair Discrimination’ requirements of Chapter II of the Act. To obtain an Employment Equity Compliance Certificate for state tenders, all employers (both designated and not-designated) must comply with the National Minimum Wage Act and with the ‘Unfair Discrimination’ requirements of Chapter II of the Employment Equity Act. What are the Submission periods for the EEA2 and EEA4 Reports?

Comments invited: Budget 2023 – Proposals to change Payroll-related Tax Legislation
The PAGSA has been invited to submit suggestions for changes to payroll-related tax legislation to be included in Annexure C of the 2023 Budget Review. If a proposal is included in the Budget Review, then in the normal course of the legislation amendment cycle that follows the budget presentation, the change will become law from the effective date published in the promulgated amendment Act (normally 1 March of the following tax year). Please email your request for changes to the legislation to [email protected] before 20 November 2022. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.