GUIDE FOR EMPLOYERS IN RESPECT OF EMPLOYEES’ TAX - …

1 EFFECTIVE DATE GUIDE FOR EMPLOYERS IN RESPECT OF EMPLOYEES TAX (2015 TAX YEAR) PAYE-GEN-01-G04 Revision: 12 Page 1 of 63 GUIDE FOR EMPLOYERS IN RESPECT OF EMPLOYEES TAX (2015 TAX YEAR) EFFECTIVE DATE GUIDE FOR EMPLOYERS IN RESPECT OF EMPLOYEES TAX (2015 TAX YEAR) PAYE-GEN-01-G04 Revision: 12 Page 2 of 63 TABLE OF CONTENTS 1 QUICK REFERENCE CARD 4 2 PURPOSE 6 3 SCOPE 6 4 REFERENCES 6 LEGISLATION 6 CROSS REFERENCES 6 5 DEFINITIONS AND ACRONYMS 7 6 BACKGROUND 15 7 REGISTRATION 16 REGISTRATION AS AN EMPLOYER 16 BRANCHES REGISTERED SEPARATELY 17 CHANGES OF REGISTERED PARTICULARS 17 DEREGISTRATION OF AN EMPLOYER 18 8 RECORD KEEPING 18 EMPLOYER RECORDS 18 RECORDS AND INFORMATION TO BE PROVIDED BY THE employee 18 9 DETERMINING THE EMPLOYEES TAX.

2 SDL AND UIF LIABILITY 19 ELEMENTS REQUIRED BEFORE EMPLOYEES TAX MAY BE DEDUCTED 19 ANNUAL EQUIVALENT CALCULATION 19 DEDUCTION TO DETERMINE THE BALANCE OF REMUNERATION 20 PENSION FUND RETIREMENT ANNUITY FUND (RAF) CONTRIBUTIONS ..21 INCOME PROTECTION POLICY PREMIUMS ..21 DONATIONS ..21 MEDICAL SCHEME FEES TAX CREDIT FOR TAXPAYERS BELOW 65 YEARS OF AGE ..22 MEDICAL SCHEME FEES TAX CREDIT FOR TAXPAYERS OVER 65 YEARS OF AGE ..23 MEDICAL SCHEME FEES TAX REBATE FOR TAXPAYERS WITH DISABILITIES.

3 23 EMPLOYEES TAX DEDUCTION 26 SDL LIABLE AMOUNT 27 UIF LIABLE AMOUNT 28 10 PAYE AND MICRO BUSINESSES Error! Bookmark not defined. 11 ESTIMATED ASSESSMENT 28 12 PAYMENTS 29 PAYMENT OF EMPLOYEES TAX, SDL AND UIF 29 INTEREST AND PENALTY 30 13 OFFENCES 31 14 TAX DIRECTIVES (LUMP SUM BENEFITS AND EXCEPTIONAL CIRCUMSTANCES) 31 PURPOSE OF A TAX DIRECTIVE 31 HARDSHIP DUE TO ILLNESS OR OTHER CIRCUMSTANCES 33 15 GAINS MADE IN RESPECT OF RIGHTS TO ACQUIRE MARKETABLE SECURITIES 34 BROAD-BASED employee SHARE PLAN 34 VESTING OF EQUITY INSTRUMENTS 35 ARBITRATION AWARDS 36 LUMP SUM BENEFIT PAYMENTS FROM A PENSION, PENSION 36 PRESERVATION, PROVIDENT.

4 PROVIDENT PRESERVATION OR RETIREMENT 36 ANNUITY FUND 36 LUMP SUMS BY EMPLOYERS SEVERANCE BENEFITS 38 LUMP SUM COMPENSATION FOR OCCUPATIONAL DEATH 39 EMPLOYER-OWNED INSURANCE POLICIES 39 16 DIRECTORS OF PRIVATE COMPANIES/MEMBERS OF CLOSE CORPORATIONS 40 17 CLASSIFICATION OF EMPLOYEES (WORKERS) 41 LABOUR BROKER 41 EFFECTIVE DATE GUIDE FOR EMPLOYERS IN RESPECT OF EMPLOYEES TAX (2015 TAX YEAR) PAYE-GEN-01-G04 Revision: 12 Page 3 of 63 INDEPENDENT CONTRACTOR 43 DIRECTORS OF PRIVATE COMPANIES/MEMBERS OF CLOSE CORPORATIONS 44 STUDENTS AND SCHOLARS 47 SEASONAL WORKERS 47 EMPLOYEES BETWEEN 65 AND 74 YEARS 47 EMPLOYEES 75 YEARS OR OLDER 48 TEMPORARY EMPLOYEES WHO ARE FREQUENTLY EMPLOYED 48 COMMISSION AGENTS 48 18 CLASSIFICATION OF PAYMENTS 49 DEEMED STANDARD AND NON-STANDARD EMPLOYMENT 49 BACKDATED (ANTEDATED)

5 SALARIES AND PENSIONS 50 RESTRAINT OF TRADE PAYMENTS 51 LEAVE PAY 51 SPECIAL REMUNERATION PAID TO PROTO TEAMS 52 ADVANCE SALARY 53 OVERTIME PAYMENTS 53 ANNUAL PAYMENTS/BONUS 53 19 ALLOWANCES AND FRINGE BENEFITS 55 ALLOWANCES 55 FRINGE BENEFITS 56 20 EXEMPTIONS 56 UNIFORMS (SPECIAL UNIFORMS) 56 TRANSFER COSTS 57 SHARE SCHEMES 58 EXECUTIVE SHARE SCHEMES 59 BURSARIES AND SCHOLARSHIPS 59 EMPLOYMENT INCOME EXEMPTIONS 61 EMPLOYER-PROVIDED LONG-TERM INSURANCE (Including Deferred 62 Compensation Schemes) 62 21 QUALITY RECORDS 62 22 DOCUMENT MANAGEMENT 63 EFFECTIVE DATE GUIDE FOR EMPLOYERS IN RESPECT OF EMPLOYEES TAX (2015 TAX YEAR) PAYE-GEN-01-G04 Revision.

6 12 Page 4 of 63 1 QUICK REFERENCE CARD The deduction tables and instructions in this GUIDE came into effect on the 01 March 2014. Note: this is only a quick reference to this GUIDE . In his Budget Speech on 26 February 2014, the Minister of Finance proposed new tax rates, tax rebates, tax thresholds and other tax amendments for individuals. These changes came into effect on 1 March 2014. Details of these proposals are listed below and EMPLOYERS must update their payroll systems accordingly.

7 Tax Tables for Individuals and Trusts 2014/2015 Tax Year (1 March 2014 to 28 February 2015) TAXABLE INCOME (R) RATES OF TAX (R) 0 174 550 18% of each R1 174551 272 700 31 419 + 25% of the amount above 174 550 272 701 377 450 55 957 + 30% of the amount above 272 700 377 451 528 000 87 382 + 35% of the amount above 377 450 528 001 673 100 140 074 + 38% of the amount above 528 000 673 101 and above 195 212 + 40% of the amount above 673 100 Tax rebates applicable to individuals 2015 Primary rebate R 12 726 Secondary rebate (for persons 65 years and older) R 7 110 Tertiary rebate (for persons 75 years and older)

8 R 2 367 Tax thresholds applicable to individuals 2015 Persons under 65 years R 70 700 Persons 65 years and older R110 200 Persons 75 years and older R123 350 Medical scheme fees tax credit 2015 For the taxpayer R 257 For the first dependent R 257 For each additional dependent R 172 Subsistence allowance (RSA only) 2015 Only incidental costs R 103 Meals and incidental costs R 335 Fringe benefit interest rate The repo rate will be 6,5% with effect from the 01 February 2014 Residential accommodation Abatement R70 700 Rates applicable to employees other than individuals Companies are taxed at a rate of 28% and trusts are taxed at a rate of 40%.

9 The rates remained unchanged for the 2015 tax year. Travelling allowance from 1 March 2014 80% of the travel allowance is subject to the deduction of Employees Tax, meaning 80% of the travel allowance must be included in the employee s remuneration when calculating employees tax. Provided that where the employer is satisfied that at least 80% of the use of the motor vehicle for a year of assessment will be for business purposes, then only 20% of the allowance will be subject to employees tax.

10 Vehicle cost ceiling R 560 000 Current rate per Kilometre EFFECTIVE DATE GUIDE FOR EMPLOYERS IN RESPECT OF EMPLOYEES TAX (2015 TAX YEAR) PAYE-GEN-01-G04 Revision: 12 Page 5 of 63 Exempt Bursary 2015 Remuneration ceiling ( previous year s remuneration proxy) R 250 000 Basic education ( employee relative) R 10 000 Higher education ( employee relative) R 30 000 Fringe benefit: employer - owned provided motor vehicles With effect from 1 March 2011, the percentage rate for all EMPLOYERS - owned provided vehicles is % per month of the vehicle s determined value.