SAPA Newsflash

First newsletter of 2014! The SAPA Board would like to wish all members a happy new year.  We trust that you have all had a good rest and are ready for what promises to be a busy and interesting 2014! Employment Tax Incentive The first reporting period for ETI is almost upon us!  Qualifying employers can make use of this tax incentive to reduce their January PAYE payment by using the formula to calculate the ETI value for employees qualifying in January, who have been taken onto the payroll since 1st October 2013.  To check on the qualifying criteria and the calculations, please refer to our newsletter of 15th November, or the Gazette and the FAQ which were provided by SARS. Version 12 of the Business Requirements Specification (BRS) has been published which includes changes for ETI reporting (please click here) as well as: Changes to employee addresses (optional for February 2014, mandatory for August 2014) New fields for ETI reconciliation Code 3816 for company car fringe benefit value when rented through an operating lease Reason code 09 for non-payment of tax on an IT3(a) to be used where any gain made from the vesting of Section 8C shares is not enough for withholding of PAYE (paragraph 11A(5) Fourth Schedule notification – No withholding possible). Updated IRP3(a) Available The application for Tax Directives (IRP3(a)) has been updated for changes in legislation to include: a.    Two new directive reasons regarding “Employer owned policy proceeds”:        i.    Taxable        ii.    Exempt b.    The severance benefit reason now aligns to the Income Tax Act No. 58 of 1962 severance benefit definition, which means that leave and pro-rata bonus must not be included as severance benefits as these amounts are only paid at the time of the termination of employment. Note: These amounts are regular employment income, and must be included in gross income rather than as severance benefit (termination) payments. The updated forms are available from the SARS website, here, the SARS Contact Centre, or SARS branches. New Tax Clearance Certificate Process An enhanced Tax Clearance Certificate (TCC) Process has been introduced via SARS eFiling, which allows you to apply for the TCC online, and collect it at a SARS branch.  This is the first step in a modernised tax compliance process which is to be phased in during 2014. This has been introduced to assist in guarding against fraud and misuse of TCC’s.  For more details, click here. Special General Meeting Notices were distributed during December regarding the necessity of re-electing the SAPA board and the special meeting scheduled for the 4th February, at the Johannesburg Country Club in Woodmead.  Please remember to let Cindy Maree of the SAPA Secretariat know if you are able to attend (cindy@vdw.co.za). Current SAPA Board The following people have been serving on the SAPA Board for the past year: James McKerrell Governance (Chairman) Sheila Leyde Finance Lavine Haripersad Events, Workshops & Seminars Cathie Webb Communications Val Forrest Professionalisation Dawn Abrahams Internal Stakeholder Engagement & Membership Nicolette Nicholson External Stakeholder Engagement Employment Tax Incentive With the revised bill, the landscape has changed a little for payroll people.  However, there are still a number of details which are not clear, from a payroll management point of view, and with 6 weeks until we have to start reporting on ETI, this leaves little time to finalise exactly what is required.  First reporting on ETI employees will (as things currently stand) be required by 7th February 2014, with our EMP201 returns. This also would mean that our tax certificates submitted to SARS for the end of February should contain the details of people who qualify.  So, at this stage, it is important to note a few details.  To see some FAQ’s published by SARS on the matter, please click here. The ETI may be used by qualifying employers who take on qualifying employees after 1st October, 2013.  A qualifying employee is between the ages of 19 and 29, and has a South African 13 digit bar-coded ID document.  This means that in the month in which an employee (who has been employed on or after 1st October 2013) turns 19 the business may claim ETI for this employee in a month in which s/he qualifies and the same applies to an employee up until the month in which s/he turns 30 (i.e. in this month s/he no longer qualifies).  Employees may qualify as ETI employees regardless of age if they work in a (yet to be defined) Special Economic Zone (SEZ) and the business in which they work is also in a SEZ, or if their employer works in an industry specified as qualifying by the Minister of Finance. Further qualifying criteria for employees include that they must earn over the minimum wage of R2000, or that prescribed by the Bargaining Unit under which their employer falls, may not be a domestic worker and may not be “connected” to the employer. There are a number of conditions which need to be met in order to be a qualifying employer, including that the employer must be registered for PAYE, all taxes (including VAT) must be up to date as on the last day of the month, the employer is not a municipality, local, provincial or national government or a public entity.  An employer may also be disqualified from the ETI if he “displaces” employees in order to take on ETI employees, if he does not meet the (still to be) prescribed training conditions, or if he is excluded by the Minister of Finance and / or Minister of Labour in terms of classification of trade. There will be more information regarding ETI’s in our next Newsflash.

SAPA Survey In order to better understand your needs and interests, and so that our mission to promote excellence in payroll may be relevant to you, SAPA has distributed a survey to all our members.  Should you not have received it during the past week, please contact admin@sapaservices.co.za.

World AIDS Day The 1st of December is World HIV / Aids Day, a day when many South African businesses bring awareness of HIV and Aids to their staff members.  To assist in preparation for this annual event, the South African Board of Personnel Practitioners has published a Fact Sheet which covers current statistics, legal frameworks, impact of the disease, strategies and policies.  For a copy of the fact sheet, click here.

Non-provisional Tax Payers The deadline for submission of Income Tax Returns ITR12 for non-provisional tax payers is 23rd November!

National Payroll Week We omitted inclusion of CRS’ celebration of National Payroll Week during September, and publish them here.  It is not too early to start deciding how YOU are going to celebrate in 2014!

Medium Term Budget & ETI The Minister of Finance announced the Medium Term Budget last week (click here to download) and announced the much waited for Employment Tax Incentive (similar to the previously noted Wage Subsidy).  This will allow business to employ young people who are between the ages of 18 and 30 years and be able to reduce the business PAYE liability by a proportion of the value of remuneration paid to these people for a period of up to 2 years, per company.  While not linked specifically to learnership requirements, the hope is that the youth will learn business skills, become marketable and formally enter the business economy through this process. It should be noted that companies may offer learnerships and benefit from the Employment Tax Incentive (ETI) simultaneously. To learn more about this, please refer to the Draft Bill which can be downloaded here. We will attempt to unpack the ETI in more detail in the next Newsflashes from SAPA. Queries can be forwarded to sapaservices@vdw.co.za, and we will attempt to answer them.

Single Payment Reference Number SARS has announced their introduction of a Single Payment Reference Number (PRN), per period, on EMP201 returns.  The PRN should be used for an entire period, including any revisions of an EMP201, i.e. the need for more than one PRN is no longer required. The PRN is a 19 digit reference and will be used for revisions for EMP201’s and to match payments to declared amounts.  It is anticipated that this will further simplify the management of PAYE, SDL and UIF accounts.

Prescribed Payment Method to SARS Gazette 36921, Notice no: 764 announced that SARS will no longer accept cheque payments of over R100000 for taxes, PAYE or VAT made at a SARS office, or by post.  For a copy of the Gazette, click here.

Tax Statistics SARS has released a fascinating document on the statistics of South African tax payers, including a breakdown by gender, income tax group and economic activity.  Click here to download the spread sheet, or on the Personal Income Tax (PIT) link to download from the SARS website (http://www.sars.gov.za/About/SATaxSystem/Pages/Tax-Statistics.aspx).

Personal Income Tax - the basics Many of us have to answer employee questions about tax and why it has to be paid.  You would not be alone if employees had assumed that you were personally responsible for calculating and deducting tax from their income!  SARS’ website has an excellent basic guide to PIT – this may be useful to you, the Payroll Administrator, or for you to refer people to: http://www.sars.gov.za/TaxTypes/PIT/Pages/default.aspx.

Tax Season 2013 Another useful guide to refer to when being questioned by staff is the Tax Season 2013 document on http://www.sars.gov.za/TaxTypes/PIT/Pages/Tax-Season-2013.aspx.  This explains the steps required for processing PAYE, deadlines for submission for the different categories of tax payer, etc.

SARS warns taxpayers of fraudulent tax returns In a media release during October, SARS warned taxpayers against “tax advisors” who guarantee refunds of tax. The article can be read on http://www.sars.gov.za/Media/MediaReleases/Pages/15%20October%202013%20-%20SARS-Warning-to-taxpayers-on-fraudulent-tax-returns.aspx. It should be noted that there have also been a number of phishing scams, with emails being forwarded from an address which looks very much like a SARS address, even to the point of including their logo in the mail.  Please remember always to deal with SARS through their website, or eFiling, or e@syFile only, as is appropriate.