Our Payroll Managers Tax Year End Hybrid Seminar held on the 10th of March 2022 had record attendance and despite this being our first attempt at a “hybrid” approach, everything ran smoothly.
The inclusion of Diane Seccombe and Sean Snyman as additional keynote speakers was very well received.
Between Rob Nowicki, Diane Seccombe and Sean Snyman, our keynote speakers, they uncovered the 2022 Budget Speech, its impact on your payroll, a deeper look into taxation and some interesting insight into what SARS has planned for the future.
We received quite a number of questions during the seminar and although we’ve distributed a detailed Q&A Update document to our seminar attendees, we’d like to share a summary of the questions asked and their respective answers.
Q & A Update
| Question | Answer |
| Does the variable remuneration principle also apply to increases effective from for example 1 January, only paid in April? Or do such payments still require tax directives? | If you were paying the backdated pay as a single lump sum you could use the variable remuneration principle. However, the process of calculating backdated pay also impacts SDL, UIF, Retirement Fund Contributions, etc and you may want all of these items calculated independently, in which case it would be better to follow the usual process. |
| Question | Answer |
| Please confirm the following: When a husband and wife both live in employer-provided accommodation, BOTH must have fringe benefits tax deducted? | Yes, however, you can approach SARS for a relaxation on this (i.e. via a directive). |
| Question | Answer |
| If you provide a declarations file to the UIF on a monthly basis indicating joiners and leavers do you still have to provide your leavers with manual UI19 forms? | The Declarations File you send to the UIF can take up to 10 days before the data on the main UIF database is actually updated. As such, it can happen (and often does!) that the affected employee can start the process of claiming benefits before their data is “in” the UIF system. When this happens the UIF official can’t see confirmation that the employee has been retrenched, resigned, etc, so in that case they would ask for a manual UI19 form from the employer. |
| Question | Answer |
| Please confirm the following: Are we required to submit a tax certificate/IRP5 for a deceased employee immediately or when we submit the annual one? | It’s normally required by the executor within the 14-day period (i.e. as defined in the Act). This is not always possible / practical so in many cases, one would need to approach the executor (and SARS!) for an extension. |
| Question | Answer |
| I submitted an IRP3 (s) which I subsequently tried to cancel because the shares were being withheld to a later period. SARS required docs to be uploaded in order to cancel. I uploaded a letter from the employer and it was seemingly accepted but since then, SARS keeps requesting docs to be uploaded before it will be cancelled as if I have not uploaded anything. What sort of docs would be acceptable to SARS? Can I ‘uncancel” a directive and start again? Any ideas would be appreciated. | Usually one can “uncancel” a directive (there will be a procedure on how to do this embedded in your payroll system somewhere!). This of course will only apply if you haven’t submitted the certificates yet. Bear in mind that the certificate is created by the payroll system so if there are directive details loaded in the employees’ payroll record it will pull through to the employees’ IRP5. If you are creating directly (i.e. manually) on e@syFile then there is a process / function available to assist in doing this. |
| Question | Answer |
| Can a fixed travel allowance be taxed at 100% if the voluntary over deduction option is ticked? | No, the SARS validation system requires either a 80% or 20% indicator when it validates the allowance. What many companies do is to create a fully taxable allowance using the normal Fringe Benefit code, which in itself causes issues when the employee completes his / her tax return as SARS wants to see anything relating to car / travel in the appropriate code on the IRP5. One can insert the voluntary over deduction option and advise an appropriate amount of tax to be deducted. This will be reconciled on assessment and any over deduction will be refunded accordingly. |
| Question | Answer |
| If employee is transferred and opts to rent in the interim as they are unable to purchase property or hasn’t found a new home yet, can the rental expense be deemed as a temp rental agreement? | Yes, but remember about the 183 days limit on this. |
| Question | Answer |
| Does the exemption on relocation also apply for new employees, as opposed to employees transferring to a new / different branch? I.e. the employer appoints a new employee from for example Cape Town, and pays relocation up to JHB. | Yes, but make sure that this is covered in the employees’ employment agreement or relocation agreement. |
| Question | Answer |
| Please advise the following: For Independent Contractors, can we ask them to apply for the Provisional Tax or must we deduct PAYE for them? | If they are individuals who are registered for Provisional Tax then they would also need a directive, otherwise normal PAYE is applicable. One reason for registering as a Provisional Tax Payer is due to that individual earning income other than normal remuneration (i.e. income from rent, income from other sources, etc), upon which tax is due, so if remuneration etc is being paid, then PAYE is due, whether it be according to the normal tables or a fixed percentage (i.e. via a directive). |
| Question | Answer |
| If the Independent Contractor claims through his company, do we have to still deduct tax? | No. If you are paying the company direct then the employee relationship would be between the individual and that company and ordinarily it would be the company’s obligation to calculate, deduct and pay over the PAYE due. However, if the rules around the company having less than three employees and the majority of income being received is from one company then tax would need to be deducted, be it according to the tax tables or in accordance with a directive. |
| Question | Answer |
| Please advise if you can withhold the lump sum, in the event that there is a directive to deduct a huge sum of money, and ask the employee to consult SARS why there is a huge penalty on the lump sum, provided its within the same stipulated time frame before paying SARS? | Yes. Any instruction from SARS re an amount that needs to be deducted from a lump sum payment is a matter between SARS and the individual, the employer must simply carry out the instruction. Failing to do this could land the employer in serious problems with SARS. So, if in doubt always consult with SARS, if you don’t and there is an issue later on, SARS could hold the employer liable. |
| Question | Answer |
| In terms of ETI Remuneration, how will the employer differentiate between section 34(1)(a) and section 34(1)(b) deductions? | Please refer here for detailed information on ETI. |
| Question | Answer |
| Please advise if the Learnership allowance is the stipend, or if there is another allowance applicable to them? | Usually only a stipend is paid but an employer is entitled to pay whatever they feel they want to which is over and above the stipend. Just be careful that if the amount paid is excessive to a point at which PAYE becomes due, the normal rules around PAYE and other taxes and levies needs to be considered. In addition, paying more than what is necessary can result in admin work regarding registering of learners for tax purposes and submitting tax certificates, etc. NB: Learnerships are often a key area of scrutiny for SARS during an audit, so get proper advice when setting up the admin and financial side of learnerships. |
| Question | Answer |
| The common question we get is how to structure payroll income in order to save a bit on tax, what would you advise? | There is not much that one can do these days as SARS has pretty much “plugged all the holes” over the years. There are a few things to consider, such as, car / travel allowances etc that one can still tweak a little (legitimately!) to save a bit of tax, but with SARS doing more and more audits on individuals these days, anything and everything generally comes out in the wash. |
| Question | Answer |
| What is the latest Prescribed Travel Rate per KM? | The prescribed travel rate per KM has been increased to R4.18 per KM, up from the previous R3.82 per KM. This rate is effective from 1 March 2022. |
| Question | Answer |
| Where can I find the latest Determined Travel Allowance Rate Table? | Please refer here for the latest Travel Allowance Rate Table. |
Always seek the advice of a professional when dealing with “out of the ordinary” tax scenarios. We have many professionals that can assist you with this. Click here to contact one of our trusted Associates.
We look forward to welcoming you to our Mid Year Tax Seminar which will take place early in October, please keep an eye on our social media for updated information.
