The following is the News flash 2023-08 published by the PAGSA on February 25, 2023 regarding the Budget 2023 – Highlights and Useful Links for Payrolls

Budget 2023: Highlights and Useful Links for Payrolls

The Minister of Finance presented the 2023 Budget Review in Parliament on 22 February 2023. The following is a summary of the key points and useful links for payrolls:

1. Tax Tables for 2024: The updated tax tables for 2024 can be found at this link: [1]. Employers can refer to these tables to calculate the tax deductions for their employees.

2. Medical Fees Tax Credit: Information on the medical fees tax credit rates can be found at this link: [2]. Employers should take this into account when calculating the tax liability for employees who contribute to a medical scheme.

3. Budget Tax Guide: The Budget Tax Guide for 2023 can be accessed at this link: [3]. This guide provides detailed information on the tax changes and updates for the year.

4. Budget Documents: All the budget documents can be found on the SARS website at this link: [4]. These documents provide a comprehensive overview of the budget proposals and changes.

Statutory Rates of Tax for 2024:

The following tax rates, tax rebates, and tax thresholds proposed by the Minister of Finance will come into effect on 1 March 2023:

– Taxable Income (R): Rates of Tax (R)
– 0 – 237,100: 18% of each R1
– 237,101 – 370,500: 42,678 + 26% of the amount above 237,100
– 370,501 – 512,800: 77,362 + 31% of the amount above 370,500
– 512,801 – 673,000: 121,475 + 36% of the amount above 512,800
– 673,001 – 857,900: 179,147 + 39% of the amount above 673,000
– 857,901 – 1,817,000: 251,258 + 41% of the amount above 857,900
– 1,817,001 and above: 644,489 + 45% of the amount above 1,817,000

Tax Rebates for Individuals:
– Primary rebate: R17,235
– Secondary rebate (for persons 65 years and older): R9,444
– Tertiary rebate (for persons 75 years and older): R3,145

Tax Thresholds for Individuals:
– Persons under 65 years: R95,750
– Persons 65 to 74 years old: R148,217
– Persons 75 years and older: R165,689

Medical Scheme Contribution Tax Credit:

The medical scheme tax credits effective from 1 March 2023 are:
– R364 in respect of the taxpayer
– R364 for the first dependent
– R246 for each additional dependent

Rate per Kilometer:

The prescribed rate per kilometer for business travel purposes has been increased from R4.18 per km to R4.64 per km. The cost scale table for 2023/24 can be accessed at this link: [5].

Subsistence Allowances and Advances:

For overnight business travel within the Republic, the daily amounts for allowances are:
– R522 per day for meals and incidental costs
– R161 per day for incidental costs only

For daily business trips (not away from home for a night), the daily amount for reimbursements is R161.

For daily expense amounts in respect of traveling outside the borders of the Republic, refer to Gazette Notice 268 GG 42258, which became effective on 1 March 2019. The notice can be found at this link: [6].

Please note that the Budget 2023 proposals to change employment-related tax legislation will be issued in a PAGSA Newsflash shortly.

References:
[1] – https://www.sars.gov.za/tax-rates/employers/tax-deduction-tables/
[2] – https://www.sars.gov.za/tax-rates/medical-tax-credit-rates/
[3] – https://www.sars.gov.za/wp-content/uploads/Docs/Budget/2023/Budget-2023-Tax-Guide.pdf
[4] – https://www.sars.gov.za/about/sas-tax-and-customs-system/budget/
[5] – https://www.sars.gov.za/wp-content/uploads/Legal/SecLegis/Legal-LSec-IT-GN-2023-003-Budget-2023-Vehicle-cost-tables-3-March-2023.pdf
[6] – https://www.sars.gov.za/legal-counsel/secondary-legislation/income-tax-notices/income-tax-notices-2023/

Disclaimer: All information provided by PAGSA is subject to our DISCLAIMER.

The State President announced in the State of the Nation Address on 11 February 2022 that the requirements of the Employment Tax Incentive Act will be reviewed. This announcement will directly impact payroll suppliers.

In recent years, various projects have been initiated to address the high levels of unemployment in the country. These include the Presidential Employment Stimulus programs, the Social Employment Fund, and the YES Initiative. However, the Employment Tax Incentive, which focuses on young people aged 18 to 29, has been the most successful.

Based on feedback from employers, it is believed that the take-up of the Employment Tax Incentive would have been even better if the requirements were simpler and the risk of non-compliance was lower. The Payroll Authors Group of South Africa (PAGSA) has made several submissions to National Treasury since 2015, requesting a re-think of the troublesome aspects of the Act. In recent years, the PAGSA has proposed changes that would significantly simplify the requirements.

The 2022 State of the Nation Address mentioned that the value and criteria for participation in the Employment Tax Incentive will be increased to encourage hiring by smaller businesses. The changes to the incentive will make it easier for small businesses, in particular, to hire young people. It is hoped that these steps to simplify the requirements will apply to all employers, not just smaller businesses.

More details about the proposed changes will be provided in the Budget proposals on 23 February 2022. However, policy makers tend to keep their cards close to their chests and provide minimal information in the budget.

Once the changes are implemented, payroll systems and Employment Tax Incentive administration processes will likely need to be adjusted. This announcement is good news for payroll suppliers and employers participating in the Employment Tax Incentive project.

Please note that all information provided by the PAGSA is subject to their DISCLAIMER.

The South African Revenue Service (SARS) has announced a webinar on the Employer Interim Reconciliation Declaration Filing Season. This webinar aims to assist employers in fulfilling their tax obligations and remaining compliant.

Employers are required by the Income Tax Act to deduct the correct amount of tax from their employees’ remuneration and pay it to SARS every month. They must also submit the Monthly Employer Declaration (EMP201) regularly and on time. The deductions and payments are reconciled through the completion of the Employer Reconciliation Declaration (EMP501). Additionally, employers must issue final tax certificates (IRP5/IT3(a)’s) to employees within the prescribed time frames and requirements. Some employers may need to submit reconciliation documents to SARS before issuing tax certificates.

SARS believes that providing clarity and certainty about tax obligations helps taxpayers fulfill their legal obligations and be tax compliant. As an important stakeholder, you are invited to join the webinar. You can also extend this invitation to other interested parties.

The webinar will cover the following topics:
– Submission channels
– General rules for import file structure
– Validation rules updates
– EMP501 reconciliation process

The webinar will take place on Thursday, 20 October 2022, from 17:00 to 19:00. It will be conducted virtually on the Zoom and YouTube platforms. To register for the webinar, please visit the following link: [insert link]. After registering, you will receive an email confirmation with the logon information for the webinar and instructions on how to ask questions during the event. The webinar will be recorded and posted on the SARSTV YouTube channel for future reference.

If you have any questions about Employer Interim Reconciliation Declarations, please send an email to [email protected].

Issued by:
PAYE Enabling and Design, and Taxpayer and Trader Education
Date: 6 October 2022

SARS (South African Revenue Service) has announced that the employer filing season for the interim period ending August 2022 will open on 19 September 2022 and close on 31 October 2022. It is important for employers to submit their filings during this period to avoid penalties.

Late submissions will result in an administrative penalty equal to 1% of the Year’s PAYE (Pay As You Earn) liability. This penalty will increase by 1% for each month outstanding, up to a maximum of 10% of the year’s PAYE liability. It is crucial for employers to submit their filings on time to avoid these penalties.

Employers can find the SARS notice regarding the employer filing season on the official SARS website or by contacting SARS directly for more information.

Please note that the information provided by the Payroll Authors Group of South Africa (PAGSA) is subject to their disclaimer.

The 2022 Employer Annual Filing Season, as announced by the South African Revenue Service (SARS), will take place from 1 April 2022 to 31 May 2022. During this period, employers are required to submit their reconciliation-related documents, including the EMP501 and tax certificates, for the period from 1 March 2021 to 28 February 2022.

It is crucial to ensure that your Annual Reconciliation is submitted on or before 31 May 2022 to comply with SARS regulations. Failure to meet this deadline may result in penalties or other consequences.

For more information and to access the official notice from SARS regarding the 2022 Employer Annual Filing Season, please visit the following link: [https://www.sars.gov.za/latest-news/paye-annual-reconciliation-2022-starts-1-april/].

Please note that all information provided by the Payroll Authors Group of South Africa (PAGSA) is subject to their DISCLAIMER.

Public Holiday: 27 December 2022

The President of South Africa has declared Tuesday, 27 December 2022 as a public holiday. This decision was made in order to compensate for Christmas day falling on a Sunday.

For more information on this public holiday declaration, you can refer to the press statement issued by the Presidency. The statement can be accessed through the following link: [Press Statement](https://www.thepresidency.gov.za/press-statements/president-declares-27-december-public-holiday#:~:text=South%20Africans%20will%20enjoy%20Tuesday,Act%20No%2036%20of%201994).

Please note that all information provided by the Payroll Authors Group of South Africa (PAGSA) is subject to our DISCLAIMER.

The following SARS notice contains information about the changes on the update to e@syFile Employer version 7.2.9.

SARS Notice: e@syFile Employer version 7.2.9.

The e@syFile Employer software has been updated to version 7.2.9 as of 3 October 2022. This update includes several important changes that users should be aware of:

1. Adjustment to the Full Resubmission Request process: Previously, users encountered issues where the process was interrupted and they were unable to proceed. This issue has been addressed in the latest version, allowing users to complete the Full Resubmission Request without any interruptions.
2. New EMP501 Form: The EMP501 Form has been updated to include a new field for capturing the reason for Over/Understatement of Declaration. This addition allows employers to provide a clear explanation for any discrepancies in their declarations.
3. Adjustment to manual capture validation: The manual capture validation process has been adjusted to align with the import and pre-submission validation. This ensures consistency and accuracy in the data captured, reducing the likelihood of errors.
4. Correction of Message Type for ETV Letters: A correction has been made to the Message Type displayed for ETV Letters in the Notification Centre. Previously, the incorrect message type (PAYE_VAL_FAIL_LETTER) was displayed. This issue has been rectified in the latest version.

Please note that all information provided by the Payroll Authors Group of South Africa (PAGSA) is subject to our DISCLAIMER.

A summary of the update to e@syFile Employer version 7.2.9 inlcudes:
1. Adjustment to the Full Resubmission Request process
2. New EMP501 Form
3. Adjustment to manual capture validation
4. Correction of Message Type for ETV Letters

UIF Notice: Retraction of the Manual UI-19 Discontinuation Notice

Background

In September, the Unemployment Insurance Fund (UIF) announced that manual UI-19 forms would no longer be accepted by labour centers in Gauteng starting from October 1, 2022. This decision was made without prior discussion with business partners, such as the Payroll Authors Group of South Africa (PAGSA). The notice did not provide a credible alternative solution, except for a vague reference to uFiling.

Discussions

Upon receiving the discontinuation notice, PAGSA immediately notified the UIF about the difficulties, uncertainty, and confusion faced by payroll suppliers and employers. PAGSA also highlighted the lack of a credible alternative solution. As a result of these discussions, the UIF has withdrawn the UI-19 discontinuation notice, effective from October 21, 2022. The UIF apologizes for any inconvenience caused by the circular.

Requests

During discussions with the UIF, PAGSA reiterated two requests. Firstly, to revive the technical discussions held in 2016 and 2017 regarding the update of the E03 declaration specification. This update aims to modernize the requirements and provide additional employee data necessary for the UIF to fulfill its legal mandate. Secondly, to discuss the creation of a practical and credible solution to replace the UIF E-Compliance Certificate online system, which was introduced without prior notification or discussion with business partners. PAGSA submitted a report detailing the weaknesses of the E-CC system and its negative impact on business and the economy. As a result, the E-CC system was also withdrawn during a discussion with PAGSA and other parties on April 11, 2022.

Current Status

The UIF has withdrawn the circular discontinuing the acceptance of manual UI-19 forms in Gauteng. Clients can continue to submit manual UI-19 forms at all labour centers. However, clients are encouraged to use the uFiling platform (https://ufiling.labour.gov.za/uif/) to submit their Unemployment, Illness, Maternity, and Adoption benefit claims. Employers can also use uFiling to declare their workers and pay monthly contributions, including for foreign employees.

Future Plans

If the UIF decides to go fully paperless in the future, the decision will be communicated by the UIF Commissioner, Teboho Maruping, after thorough consultations with clients, employers, and critical stakeholders. The UIF remains committed to providing excellent services.

Reference: Unemployment Insurance Act Section 56

Section 56 of the Unemployment Insurance Act states that every employer must provide certain information regarding its employees to the Commissioner. This information includes the employer’s address, details of the authorized person responsible for the employer’s duties, and the names, identification numbers, monthly remuneration, and employment addresses of each employee. Employers are required to provide this information before the seventh day of each month. The Minister may issue regulations regarding the submission of information for domestic employers and small businesses or enterprises.

Disclaimer: All information provided by PAGSA is subject to our disclaimer.

The EMP501 Reconciliation Submission issue is a system problem experienced by the South African Revenue Service (SARS) regarding the pre-population of EMP201 declared liabilities on the EMP501 return. This issue has been confirmed by SARS, and they have assured that it will be resolved before the following Monday.

The specific problem occurs when attempting to submit the completed EMP501 to SARS, resulting in an error message (ERROR 0001) indicating that no EMP201 returns were submitted for the reconciliation period. SARS has acknowledged this error and has issued a letter addressing the issue.

According to the letter, the error is encountered even if monthly EMP201 returns have been submitted to SARS. The system fails to pre-populate the EMP201 figures onto the EMP501 return, leading to this error. In light of this, SARS advises those experiencing this error and who have already submitted their monthly EMP201 returns to refrain from submitting the EMP501 return until the following week when SARS expects to have resolved the issue.

It is important to note that the information provided by the Payroll Authors Group of South Africa (PAGSA) is subject to their DISCLAIMER.

SARS Notice: Services during the Strike Action at SARS

The South African Revenue Service (SARS) has confirmed that members of the Public Servants Association (PSA) and the National Education, Health and Allied Workers’ Union (NEHAWU) have gone on strike following a notice given by the unions to SARS Management. This strike follows a temporary suspension by the PSA in May, and the union leadership has stated that they will remain on strike until SARS improves its wage offer.

The dispute arose when the trade unions rejected the available R70 million for baseline increases for bargaining unit employees. SARS has explained that it does not have control over its own funding and relies on an annual allocation managed by the National Treasury. The demand of CPI plus 7% from the unions is simply unaffordable until SARS receives further funding.

SARS acknowledges the financial challenges faced by many South Africans, including its own employees, due to increasing food and fuel prices and other essential services. SARS respects the constitutional right of workers to strike within the provisions of the law, while also taking the necessary steps to fulfill its legal mandate and serve taxpayers and traders. Employees participating in the strike will not receive pay for the days they do not work.

On the first day of the strike, SARS experienced minimal disruption to its services. While some branches had to close due to a lack of workers, taxpayers were still able to interact with SARS through its online services. Appointments that were scheduled before the strike began have been rescheduled.

SARS has implemented business continuity plans and other contingencies to ensure the delivery of essential services to taxpayers. The public is encouraged to visit the SARS website for updates on how to engage with SARS and fulfill their obligations. Taxpayers are advised to avoid visiting SARS offices during the strike.

SARS appeals to the unions to maintain peaceful protests and abide by the picketing rules specified by the Commission for Conciliation, Mediation and Arbitration (CCMA).

SARS has been transparent about its financial position and has shown a willingness to engage with union leadership to resolve the impasse. SARS has made every effort within its available funding to extend an offer to the trade unions, which remains on the table. SARS is open to continuing discussions with the unions on the offer and the broader Employee Value Proposition.

For further information, please contact [email protected].