Should I be paying tax?

by with No Comment Employee TaxLatest Payroll NewsPAYETaxUncategorised

Should I be paying tax?

It’s something we all wish we did not have to pay and it is one question  that comes up time and time again. There a many questions the average employee or even employer asks and many of them one would assume have obvious answers but tax does not have obvious answers and it is dangerous to hazard a guess when discussing tax and answering questions such as laid out below.

Question:

I earn a basic wage of R1720.00 per week and I have deductions.

My deductions are:

UIF = R17.00

Provident Fund = R111.00

Council Levy = R2.50

Union Fee = R14.05

Sick Fund = R25.80

Funeral Fund = R1.80

Should I be paying tax?

Answer:

R73,650 is the annual tax threshold for the current year and this means anyone who earns less than this will not pay tax.

R73,650 equates to R6137.50 a month or about R1416 per week.

If you earn R1720 per week this is above the weekly threshold and thus you quality to be taxed on the earnings value only. There could well be a few deductions that could bring the amount down and thus below threshold, all the deductions in the example above are tax deductions and the table amount will remain at R1720.

The answer to the question in a nutshell is that PAYE should be deducted from your earnings.

To get a real grip on your Payroll you need Paymaster Payroll

 

Payroll processing: A guide for new business owners

by with No Comment Latest Payroll NewsPAYEPayroll

Payroll processing: A guide for new business owners

Press release issued by IdeaEngineers
Johannesburg, 25 Jun 2015

Starting and growing your own business is an exciting and challenging undertaking. Entrepreneurship is not for the faint of heart, and the requirements for financial reporting and tax compliance can quickly bring those business owners fantasising about ‘the next big thing’ back to reality.

Whether you manage your own payroll process or have grown your business to the point where you’ve hired an administrative and/or payroll manager, this payroll processing guide will ensure you don’t miss any of the steps and stay on track with tax registration and submissions.

1. Employer registration for PAYE

By growing your business in South Africa and becoming an employer, you’re positively contributing towards the country’s economic prosperity, but this does come with some administrative responsibility. The first step in the process is to let the South African Revenue Service (SARS) know that you are registering as an employer and will be submitting PAYE tax. You are required to register with SARS as an employer by completing and submitting the EMP101 form, no longer than 14 days after becoming an employer.2. Payment of PAYE tax

By or before the seventh day of each month, you are required to pay SARS the PAYE tax collected from your employees, and submit a completed EMP201 return, which shows all the PAYE tax deductions from your employees’ salaries, commissions, bonuses, and any additional earnings and benefits.

3. Skills Development Levy (SDL) registration

The South African government imposes a 1% levy on a company’s payroll to encourage learning and development in and through the company. The Skills Development Levy (SDL) is applicable to companies where the total amount paid to salaries is more than R500 000. Employers need to register for SDL with SARS no later than 14 days after becoming an employer. If your total for employees’ salaries is below R500 000, then your company is exempt from the SDL.

4. UIF registration

The Unemployment Insurance Fund (UIF) makes provision for employees who have contributed towards it, to receive an income if they find themselves made redundant or unemployed, or on maternity leave. Employees and employers contribute an amount equal to 1% of an employee’s salary to UIF.

As an employer, you need to register for UIF with the Department of Labour by completing the UI-8 form, after which you’ll be given a registration number. You must also register for UIF with SARS within 14 days of becoming an employer. Employers not only make monthly UIF payments, but also need to declare these UIF contributions – this can be done electronically via your payroll system (instead of submitting the paper-based UI-19 form).

5. Issuing tax certificates

As an employer, you’ll be responsible for issuing tax certificates to your employees at the end of each financial year. These forms – either IRP5 or IT3a forms – go hand-in-hand with your employer reconciliation submissions (EMP501) and declarations (EMP201), which need to be submitted to SARS at the end of each tax year. If you run an automated payroll solution, you can produce and print tax certificates at the push of a button, and also upload these certificates to SARS’s online returns systems – e@syFile and eFiling – instead of needing to capture them manually.

6. Streamline your business with automated processes

The benefit of running an automated payroll system is that it is much easier to integrate your internal HR and payroll processes with your SARS submissions. SARS’s electronic submissions applications integrate fully with automated payroll systems and solutions, which means you or your HR or business administrator can file returns and interact administratively with SARS from your office at any time of day. This is good news for you if you’re the kind of business owner who wants to focus your and your staff’s time on core business, and leave the nitty-gritty processing up to technology.

RETURN OF EARNINGS 2013

by EmployersPAYEPayroll

INFORMATION AND GUIDELINES

  1. IF THE RETURN IS NOT SUBMITTED TO THIS OFFICE ON OR BEFORE 31 MAY 2014, A PENALTY NOT EXCEEDING 10% (TEN PERCENT) OF THE FINAL ASSESSMENT, MAY BE IMPOSED, IN TERMS OF SECTION 83(6)(b). THE ACT EMPOWERS THE DIRECTOR GENERAL IN TERMS OF SEC 83(6)(a) TO ESTIMATE THE EARNINGS.
  2. KINDLY TAKE NOTE THAT THE RETURN OF EARNINGS, W.As.8, IS MAILED TO ALL REGISTERED EMPLOYERS IN THE BEGINNING OF THE YEAR. THE ONUS IS UPON THE EMPLOYER TO NOTIFY MY OFFICE BY THE 1ST OF MARCH IF THE RETURN OF EARNINGS FORM HAS NOT BEEN RECEIVED. FORMS ARE AVAILABLE ON THE WEBSITE.

 

WHO IS AN EMPLOYEE AS REFERRED TO IN PART 2

“Employee” means a person who has entered into, or works under a contract of service or apprenticeship or learnership with an employer, whether the contract is expressed or implied, oral or in writing, and whether remuneration is calculated by time or work done, or is in cash or in kind and includes –

  • Casual / temporary employee employed for the purpose of the employer’s business/farming activities.
  • Working director of a Company or member of a Close Corporation/Body Corporate, who has entered into a contract of service, or of apprenticeship or learnership, in so far that the employee acts within the scope of his/her employment in terms of such contract. (Excluding shareholders or “silent partners” who are only paid dividends or sharing profits).

NB. A sole owner or partners in a business/farming operation are not regarded as “employees” as contemplated by the Act and their earnings should, therefore, not be included.

A person provided by a labour broker, against payment to a client for the rendering of a service or the performance of work and for which service or work such person is paid by the labour broker, is an employee of the labour broker. The earnings of such persons should not be included in the client’s Return of Earnings document.

 

WHAT ARE EARNINGS (STAFF COSTS/SALARIES & WAGES) AS REFERRED TO IN PART 2

Earnings are all payments made regularly, before any deductions, whether in money or in kind, to employees.

The following list is not exhaustive, but are intended only to highlight certain remuneration items for which there may be some doubt as to their inclusion or exclusion.

Included in the gross earnings before any deductions are the following:

  • Overtime of a regular nature, (not intermittent or irregular overtime).
  • Bonuses of any kind, including incentive bonuses and annual bonuses.
  • Commission, even though the amount may vary from month to month.
  • The cash value of food and quarters supplied to employees as part of a remuneration package. Cash value of fringe benefits such as a company car, free accommodation or accommodation at a reduced rate, etc.
  • Travel and other allowances paid regularly, as part of the package.
  • Where the employee is remunerated in accordance with a package of benefits, all items forming part of the package, other than employer contributions such as medical aid contributions.
  • Earnings/Drawings paid to working Directors of a Company or Members of a Close Corporation.

Attach a list with their names, ID numbers and addresses.

Excluded are the following:

  • Payments of a reimbursive nature.
  • Overtime worked occasionally.
  • Payments for specific non-recurring tasks, which do not form part of an employee’s normal duties.
  • Ex gratia payments.
  • Intangible fringe benefits such as the taxable portion of medical aid/pension contributions by the employer, etc.
  • Payments to cover special expenses such as subsistence and travelling costs, lunch and costs for business meetings.
  • Travel and other allowances paid occasionally.
  • Profit sharing of Directors and Members.

 

FINAL EARNINGS

When a business is sold/ceased, liquidated/sequestrated or the employer deceased:

Indicate the date in the space provided on the front page (item 1.13) and declare the final earnings paid to that date.

 

MINIMUM ASSESSMENT SECTION 83(2)(b)

As a result of continuously rising costs, the 2013 – 2014 minimum assessment has been increased to R 900 per annum.

 

LETTER OF GOOD STANDING

This letter can be obtained once the employer has complied with the requirements of the COID Act, inter alia:

  • Submitting the latest return of earnings.
  • Assessment has been paid or instalments have been arranged and paid.
  • Application should be made in good time, 5 working days before it is required, preferably on a letterhead, in writing. If arrangements made for instalments attached copy of receipt.
  • Please quote the registration number, as well as telephone and fax numbers with dialling code.
  • E-mailed requests are acceptable. Use only the e-mail address cf.logrequest@labour.gov.za
  • Any tampering with the contents of these letters is a serious offence.

 

WEBSITE ADDRESS

The Compensation for Occupational Injuries and Diseases Act, 1993 and Amendments are available on the website at www.labour.gov.za

 

RETURNS OF EARNINGS ONLINE SUBMISSION

The office has introduced the online submission of Return of Earnings. The employers can submit their return online by following these steps

–     Go to www.labour.gov.za

–     Under Online Services window click Compensation Fund Return of Earnings Submissions

–     On the next screen click I am a new user and I want to Register -> Resister for DOL User account

–     Fill in the required fields and Apply for DOL access register

Alternatively click on the link below for ROW process flowchart. https://roe.labour.gov.za/DolRegistrationWeb/resources/docs/ROEInstructionManual.pdf

If you encounter any problems please send an email to ian@paymaster.co.za.

New year's resolutions for the payroll department. This year will be different.

by PAYEPayroll

 

This year it will be different. This year I will not make resolutions with a definitive end goal in mind that has a measurable result and a defined due date. This year I am going to focus on 5 processes, when improved significantly, will bring the results I desire. Here are the five resolutions for payroll this year.

  1. We will automate where we can Every manual process will be examined carefully and looked at to see if we can automate the process. Let’s see if we can eliminate punching in any data this year and look to import everything we can. Can we involve our line managers to give us data in a format that we can import? How much can we do through employee self serviceeg. petrol claims, commission, leave.
  2. We will be the gatekeepers of company policy and the laws of the land We will be the stronghold. This year we will stand firm and make sure that the company policy is adhered to. I will meet with those line managers that keep on pushing the boundaries and try to come to an understanding.
  3. We will reduce paper I am tired of wasting my time on filing and tired of wasting my time on trying to find items that were misfiled. I will actively look to scan and e file as much as I can. I want to eliminate paper from my world.
  4. We will balance everything we can I love completeness, neatness, a sense of finished. It is balanced. What went in came out and all accounted for. So this year I will look for areas that can balance, areas that we can tick and say yes that’s right. Examples include overtime hours, leave days, and commissions.
  5. Relationships, relationships, relationships. I will build relationships with all my clients, being proactive by advising them of any changes and making sure that the payroll department is seen as adding value.

If I work on these five areas I have no doubt that the payroll department will be a respected member of the team, adding value to the company.

 

Administrative Penalties for PAYE non-compliance

by with No Comment Employee TaxPAYEPenaltiesSARS

This notice appears on the SARS website.
A number of Employers have still not complied with 3 June 2011 submission for the annual Employer Reconciliation Decleration and as a result, SARS will now, impose penalties in relation to PAYE transgressions, allowed in terms of the 4th schedule of the Income Tax Act no 58 of 1962.

For PAYE Tax, the administrative penalty will be imposed:

Where the employer:

1) Does not submit the annual EMP501 reconciliation

2) Does not pay the total PAYE amount that was declared in the Employee Tax Certificates[IRP/IT3(a)] over to SARS, even where the return has been submitted on time, andSubmits incorrect, incomplete or inaccurate data within the IRP/IT3(a) certificates, evenwhere the return has been submitted on time.

Then  a percentage based penalty equal to 10% of the total PAYE paid for the period (this is a once off penalty), and there will be an adjustment of the penalty, calculated on a percentage sliding scale

based on the date that the non-compliance was remedied over a period of 9 months, e.g if the

remedied in the first month from imposition, then the 90 % of the 10% penalty will be waived.