Pending Clarification of Final Tax Amendments

The Payroll Authors Group of South Africa (PAGSA) has been discussing two complicated amendments with the authorities in order to gain clarity. These amendments are related to the reduction of the value of the ‘long services award’ and the definition of “monthly remuneration” in the ETI Act.

Unfortunately, as of now, there are no answers available regarding these amendments. The issues arose due to last-minute changes made by the Standing Committee of Finance to the final Taxation Laws Amendment Bill that was tabled in November 2021.

Discussions have been ongoing with the authorities since the publication of the final Bills submitted to the National Assembly. The South African Revenue Service (SARS) is working to clarify uncertainties and provide solutions for implementation problems.

It is anticipated that clarity on these amendments will be provided by the end of this week. Newsflashes will be issued immediately to update stakeholders as soon as clarity is obtained.

The PAGSA acknowledges the time pressure this places on taxpayers and their development teams, especially considering that the new tax year begins next week. The PAGSA apologizes for any inconvenience caused.

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

SARS Wage Negotiations Dispute and Potential Industrial Action

The South African Revenue Service (SARS) is currently in a dispute regarding its wage negotiations process for 2022. This has led to the possibility of an imminent industrial action, such as a strike, by SARS employees.

In response to this situation, SARS has taken steps to ensure that its service delivery is not significantly affected. Contingency measures have been put in place to mitigate any potential disruptions caused by the industrial action.

For further details and a comprehensive understanding of the matter, a letter from SARS addressing the wage negotiations dispute has been attached for reference. This letter provides additional information and may be helpful in answering any questions that may arise.

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

UIF Notice: Manual UI-19 Discontinued

The Unemployment Insurance Fund (UIF) has announced that starting from October 1, 2022, all Gauteng Labour Centers will no longer accept manual UI-19 forms. These forms are typically used to update employee information for the purpose of claiming a UIF benefit.

It is important to note that this notice was not discussed with the Payroll Authors Group of South Africa (PAGSA) and cannot be found on the UIF website at this time. The notice was shared with the PAGSA by one of its members. The PAGSA has sent an urgent email to senior UIF officials to inquire about the implementation of this notice, but has not yet received a response.

The notice consists of two pages, with the first page containing some confusing language. It includes a sentence copied from section 56(3) of the Unemployment Insurance Act, which states that “every employer…in terms of subsection (1)” must provide certain information. However, it is unclear what exactly is meant by “all information” in this context. Is it referring to the detailed information specified in the E03 specification for monthly employee declaration files, or is it referring to the subset of information specified for the UI-19 form? The full section 56 of the Unemployment Insurance Act is included in the appendix for reference.

The authority of the UI “Management” that issued this notice to discontinue the manual UI-19 forms based on section 56 of the Act is uncertain. However, the most important concern is determining what actions should be taken from October 1, 2022. It should be noted that the notice specifically mentions “all Gauteng Labour Centers,” which implies that UI-19 forms will still be accepted at Labour Centers in other parts of the country, at least for the foreseeable future.

The second page of the notice contains a poor copy of Chapter 1 of the ‘uFiling System User Guide,’ which provides three steps to assist employers in registering for uFiling. It is assumed that the purpose of this notice is to inform employers who are not registered for uFiling to do so as soon as possible, or at least before needing to modify or update employee information using the manual UI-19 forms, as this option will no longer be available.

More information will be provided as it becomes available.

The National Minimum Wage Hourly Rates have been increased according to the National Minimum Wage Commission Review Report published in Gazette #45649 on 17 Dec 2021 and the National Minimum Wage Act Amendment published in Gazette #45882 on 7 Feb 2022.

The National Minimum Wage Act (NMW Act) was implemented on 1 January 2019 to establish the national minimum wage rate requirements and ensure that they are reviewed annually. Section 4(2) of the NMW Act states that regular reviews are necessary to prevent the minimum wage from falling behind inflation. The National Minimum Wage Commission, composed of various stakeholders, is responsible for conducting these reviews and making recommendations to the Minister.

Section 6 of the NMW Act mandates the Commission to review the national minimum wage annually and propose adjustments to the Minister. The Commission has the authority to recommend an increase, decrease, or no change to the minimum wage rate based on their findings. The final decision is made by the Minister.

When conducting the annual review, the Commission must consider economic factors such as inflation, the cost of living, wage levels, productivity, and the impact on employment. The reduction of wage differentials and inequality, as well as the alleviation of poverty, are also important considerations.

The National Minimum Wage rates have been increased effective from 1 March 2022, as stated in Government Gazette No. 45882 issued on 7 February 2022. The hourly rates for general workers, farm workers, domestic workers, and public works program workers have all been increased. The specific rates can be found in Schedule 1 and Schedule 2 of the National Minimum Wage Act.

Learners, as defined in Section 17 of the Skills Development Act, are also entitled to minimum wages based on their NQF levels and credits earned. The weekly minimum wage rates for learners have been increased for all levels.

It is important to note that the increase in the national minimum wage rate also impacts wage rates set in sectoral determinations that are higher than the minimum wage. These wage rates must be increased proportionally to the adjustment of the national minimum wage.

The National Minimum Wage Act defines a “worker” as any person who works for another and receives payment for their work. This definition includes independent contractors, meaning that they may be entitled to the national minimum wage.

The Act also distinguishes between “wage” and “remuneration.” While “wage” is a subset of “remuneration,” not all amounts classified as “remuneration” qualify as “wage.” The definition of “wage” in the Basic Conditions of Employment Act (BCEA) applies in the context of the National Minimum Wage Act.

For more detailed information on the specific rates and sectoral determinations, refer to the relevant gazettes and the National Minimum Wage Act.

2022 PAGSA Annual General Meeting

The PAGSA Annual General Meeting for the year 2022 will take place on 13 June 2022 at 09:00. Due to current circumstances, the meeting will be held virtually on the Zoom platform. The PAGSA will be responsible for organizing and managing the meeting, as they have done in the past for face-to-face AGM meetings. Invitations will be sent out a few days before the meeting, but it is advised to mark the date in your calendar in the meantime.

There will be a slight change in the voting procedure for the election of Exco members to accommodate the virtual meeting. The new procedures will be included in the formal notice pack. It is worth noting that all current Exco members have confirmed their availability to serve another term.

The morning of the AGM will be divided into two separate meeting sessions, each with its own Zoom invitation. The details are as follows:

1. AGM Formal Session:
– Time: 09:00 to 10:30
– Attendees: Payroll supplier members only

After the formal session, there will be a 30-minute break to allow attendees to attend to emails, grab a snack, etc.

2. Information Session:
– Time: 11:00 to 12:30
– Attendees: Payroll supplier members, Associate members, and SARS representatives

SARS (South African Revenue Service) has graciously agreed to have several senior personnel attend the Information Session. The session will cover the following topics:

1. PAGSA: PAYE Fixed-rate Calculation issues (currently under discussion)
2. SARS: Keynote address by Mark Kingon

During the Information Session, SARS welcomes input from PAGSA members and encourages feedback on SARS issues from a payroll and employer perspective. Attendees will have the opportunity to ask questions to SARS representatives.

The relationship between PAGSA and SARS has been mutually beneficial over the years. The PAGSA values the collaboration and appreciates the opportunity to provide credible and balanced feedback to SARS to help improve their services and products.

Formal AGM notices will be sent out as soon as possible. However, there are no resolutions for changes to the PAGSA constitution at this time.

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

Regards,
Rob Cooper
Chairman, Payroll Authors Group of South Africa

SARS Income Tax Return Notice – Filing Season for 2022 Tax Year

The South African Revenue Service (SARS) has issued a notice regarding the filing of income tax returns. This notice, titled “Returns to be submitted by persons in terms of Section 25 of the Tax Administration Act, 2011,” is expected to be published in the Government Gazette on 3 June 2022.

Key Points:

1. Individuals with One Source of Income for the 2022 Tax Year:
– Individuals who received remuneration from only one source and do not have any other allowances or benefits are required to submit an income tax return.
– However, they are exempt from filing if their total remuneration does not exceed R500,000 and PAYE (Pay-As-You-Earn) has been deducted according to the prescribed tax deduction tables.

2. Filing Deadlines for the 2022 Tax Year:
– Non-Provisional Taxpayers: Income tax returns must be submitted on or before 24 October 2022.
– Provisional Taxpayers using eFiling: Income tax returns must be submitted on or before 23 January 2023.

Please note that the above points are a summary of the notice.

Disclaimer:
All information provided by the Payroll Authors Group of South Africa (PAGSA) is subject to our disclaimer.

Reference:
– “Returns to be submitted by persons in terms of Section 25 of the Tax Administration Act, 2011” notice by SARS. (To be published in the Government Gazette on 3 June 2022)

Budget 2023: Highlights and Useful Links for Payrolls

The Minister of Finance presented the 2023 Budget Review in Parliament on 22 February 2023. Here are the key highlights and useful links for payrolls:

1. 2024 Tax tables: The latest tax tables can be found at https://www.sars.gov.za/tax-rates/employers/tax-deduction-tables/. These tables provide the rates of tax applicable to individuals based on their taxable income.

2. Medical fees tax credit: Information on medical fees tax credits can be found at https://www.sars.gov.za/tax-rates/medical-tax-credit-rates/. This includes the tax credits for the taxpayer and their dependents.

3. Budget Tax Guide: The Budget Tax Guide for 2023 can be accessed at https://www.sars.gov.za/wp-content/uploads/Docs/Budget/2023/Budget-2023-Tax-Guide.pdf. This guide provides detailed information on the tax changes and updates for the year.

4. Budget documents: All the budget documents can be found at https://www.sars.gov.za/about/sas-tax-and-customs-system/budget/. These documents provide a comprehensive overview of the budget proposals and changes.

Statutory Rates of Tax: 2024 Year of Assessment (1 March 2023 — 28 February 2024)

The following tax rates, tax rebates, and tax thresholds proposed by the Minister of Finance come into effect on 1 March 2023 and is applicable to the 2024 tax year:

– Statutory rates applicable to individuals: The rates of tax are based on the taxable income of individuals. The rates range from 18% to 45%. The specific rates can be found in the table provided.

– Tax rebates applicable to individuals: There are three tax rebates available for individuals. The primary rebate is R17,235, the secondary rebate for persons 65 years and older is R9,444, and the tertiary rebate for persons 75 years and older is R3,145.

– Tax thresholds applicable to individuals: The tax thresholds determine the income level at which individuals start paying tax. The thresholds vary based on age, with different thresholds for persons under 65 years, persons 65 to 74 years old, and persons 75 years and older.

Medical Scheme Contribution Tax Credit

The medical scheme tax credits for 2023 are as follows:

– 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 to R4.64 per km. This rate applies when no other form of compensation is received for business travel. The full cost scale table can be accessed at 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.

Subsistence Allowances and Advances

For overnight business travel within the Republic, the daily amounts for allowances are as follows:

– 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.
The subusistence daily rates that were published can be accessed at https://www.sars.gov.za/wp-content/uploads/Legal/SecLegis/Legal-LSec-IT-GN-2023-001-Budget-2023-Subsistence-Allowances-Rates-Day-Allowance-3-March-2023.pdf

For daily expense amounts in respect of traveling outside the borders of the Republic, refer to Gazette Notice 268 GG 42258, which remains in force. This gazette can be accessed at https://www.sars.gov.za/legal-counsel/secondary-legislation/income-tax-notices/income-tax-notices-2023/

Budget 2023 proposals for employment-related tax legislation changes will be issued in a PAGSA Newsflash soon.

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

SARS PIT Modernisation Project – Update for All Members

The SARS PIT Modernisation Project is an initiative by the South African Revenue Service (SARS) to modernize the administration of Personal Income Tax (PIT). This project aims to improve the efficiency and accuracy of payroll processing for employment taxes, including PAYE, SDL, UIF, and ETI.

Background:
In February 2020, SARS briefed the Payroll Authors Group of South Africa (PAGSA) on their plans for the SARS Vision 2024 PIT project. The PAGSA, in collaboration with SARS, compiled seven comprehensive documents outlining important aspects of payroll administration. These documents aimed to provide SARS with a better understanding of the practical difficulties faced in processing employment taxes on a regular basis.

Meeting on 25th January 2023:
In a meeting held on 25th January 2023, SARS and the PAGSA discussed the project in more detail. As a result of this meeting, SARS requested a change in the project name from “SARS Vision 2024 PIT” to “SARS PIT Modernisation.” This change reflects the focus on modernizing the administration of Personal Income Tax.

Heads-up for Payroll Suppliers:
Payroll suppliers need to be aware that the implementation of the SARS PIT Modernisation Project, including monthly tax certificate submissions, is expected to bring significant changes to their payroll systems. These changes are likely to occur shortly after the start of the 2023/24 tax year. It is important for payroll suppliers to prepare themselves for these upcoming changes.

Progress Updates:
As the project progresses, updates will be provided to keep all members informed. Payroll suppliers can expect to receive more detailed information as it becomes available. It is crucial to stay updated on the latest developments related to the SARS PIT Modernisation Project.

Disclaimer:
All information provided by the PAGSA is subject to their disclaimer. Members should refer to the disclaimer for any legal or liability concerns regarding the information provided.

In summary, the SARS PIT Modernisation Project aims to improve the administration of Personal Income Tax by modernizing payroll processing for employment taxes. Payroll suppliers should be prepared for significant changes to their systems, and updates will be provided as the project progresses.

The South African Revenue Service (SARS) briefed the Payroll Authors Group of South Africa (PAGSA) on their plans for the SARS Vision 2024 PIT project in February 2020. In 2021, PAGSA compiled seven documents for SARS to provide a better understanding of payroll administration. PAGSA engaged with SARS in several meetings to explain the practical difficulties of processing PAYE, SDL, UIF, and ETI on a weekly, fortnightly, and monthly basis.

During a meeting on January 25, 2023, SARS and PAGSA discussed more details about the SARS PIT Modernisation project. SARS requested that the project name be changed from “SARS Vision 2024 PIT” to “SARS PIT Modernisation.” The changes to the administration of PAYE will require payroll system development, which will directly impact PAGSA payroll supplier members.

Payroll suppliers must prepare themselves for significant changes to their payroll systems soon after the start of the 2023/24 tax year if the roll-out of the Vision 2024 PIT project proceeds as planned. PAGSA will advise payroll suppliers of progress as the project proceeds, and more detail will be issued as soon as it becomes available.

For more information, visit https://www.pagsa.org.za/2023/06/10/nf-2023-03-sars-2024-pit-modernisation-project/.

Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa

All information provided by PAGSA is subject to our DISCLAIMER.

The Unemployment Insurance Fund (UIF) has issued a notice stating that from 1 October 2022, all Gauteng Labour Centers will no longer accept manual UI-19 forms for updating employee information. It is unclear what is meant by “all information” in the notice, but it is assumed to refer to the subset of information specified by regulation for the UI-19 form. The notice was not discussed with the Payroll Authors Group of South Africa (PAGSA) and cannot be found on the UIF website. The PAGSA has sent an urgent email to senior UIF officials to query the implementation of the notice, but has not yet received a reply.

The second page of the notice contains a poor copy of Chapter 1 of the uFiling System User Guide, which presumably aims to encourage employers to register for uFiling in order to update employee information. It is uncertain how section 56 of the Unemployment Insurance Act empowers the UIF “Management” to discontinue the manual UI-19. However, it is important to determine what to do from 1 October 2022. The notice only applies to Gauteng Labour Centers, and it is assumed that Labor Centers in the rest of the country will continue to accept UI-19 forms.

For more information, visit https://www.pagsa.org.za/2023/06/10/nf-2022-45-uif-notice-manual-ui-19-discontinued/.

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

Annexure: Unemployment Insurance Act Section 56
Section 56 of the Unemployment Insurance Act requires every employer to provide information regarding its employees to the Commissioner, including the street address of the business, the particulars of the authorized person, and the names, identification numbers, and monthly remuneration of each employee. Employers must provide this information before the seventh day of each month. The Commissioner may request additional information as needed.