Johannesburg, 29 Feb 2012
Quite a few changes were made during Finance Minister Pravin Gordhan's Budget Speech, on Wednesday, 22 February 2012, which will have a direct impact on payroll administrators across South Africa, says Karen Schmikl, Legislation Manager at Softline VIP, part of the Sage Group.
“The most noteworthy is a change in the taxation of medical aid contributions from March 2012,” says Schmikl. “Payroll administrators will have to ensure that their payroll systems are updated as from 1 March 2012 to reflect the changes stipulated. Not implementing these changes in the first period of the new tax year will result in incorrect PAYE, SDL and UIF contributions.”
Medical tax credits replace the medical aid cap amounts used over the past few years.
* Individuals who are 65 years and older still have the benefit of a medical aid tax deductible deduction, subject to no limit.
* Employees who are younger than 65, however, no longer have the benefit of a medical aid tax deductible deduction. They do, however, qualify for a monthly medical tax credit (MTC).
* The MTC will be deducted from the tax calculated for the employee for each month the employee contributes to a medical scheme, reducing the employee's tax due each month.
* The MTC is calculated in relation to the number of beneficiaries on the medical aid - the values are R230 for the main member, R230 for the first dependent and R154 for each additional dependent.
“The result of this change is a more equitable benefit for all individuals who belong to medical aids. Lower income employees will 'see' a greater tax benefit than higher income employees when comparing February and March tax amounts,” says Schmikl.
The tax tables for individuals and special trusts for the year ending 28 February 2013 were updated.
Schmikl says the tax rebate amounts have also been changed. “The primary tax rebate amount has been adjusted to R11 440, while a secondary rebate for persons of 65 years and older is pegged at R6 390. A tertiary rebate for persons of 75 years and older is set at R2 130.”
The adjustment to the tax threshold amounts effectively nullified Standard Income Tax on Employees (SITE) limits. “Below the age of 65, the tax threshold has been set at R63 556; ages 65 to below 75 now have a tax threshold of R99 056; while ages 75 and over have a tax threshold of R110 889,” says Schmikl.
An employee is entitled to receive a subsistence allowance when the employee is obliged to spend at least one night away from his or her usual place of residence, says Schmikl.
“The value of the deemed allowance or advance where the accommodation is in the RSA has been amended to R303 per day for meals and incidental costs, and R93 per day for incidental costs only. The schedule of rates for accommodation outside the RSA will be gazetted towards the end of the month.”
Travel allowance costs have also been adjusted. “The SARS deemed rate per kilometre increased from R3.05 to R3.16. The fuel and maintenance cost values have furthermore been amended and it is advisable to recalculate the value of all employees' travel allowances from March 2012,” says Schmikl.
“The changes lined out in Gordhan's Budget Speech will have far-reaching effects on any payroll system. It is advisable for employers to take note of these changes and to confirm that they are being applied to their payroll system in order to keep the company current and up to date with legislation,” concludes Schmikl.
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