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The employer tax certificate season for February 2015 closed on 29 May 2015. As usual most employers managed to submit without any hick-ups, whilst others faced a few perplexing issues. Overall e@syfile performed well and the majority of employers submitted well within the allocated time frame.

The Individual Filing Season has now kicked off and employees should start submitting their tax returns now – particularly if a refund is due!!

Remember that the Individual Tax Season runs from July to November every year. For provisional taxpayers who submit via eFiling, it runs until January of the next year.

The important dates are:

30 September 2015 – Manual/postal submissions

27 November 2015 – SARS branch (non-provisional)

27 November 2015 – eFiling (non-provisional)

29 January 2016 – Provisional taxpayers via eFiling

Individuals who do not need to submit a tax return: 

An individual whose total earnings for the year (1 March 2014 – 28 February 2015)  did not exceed R350 000.00 and all the below conditions are met:

  • Only had one employer (i.e. only have one IRP5)
  • Did not receive a car allowance or other income (e.g. interest or rent)
  • Does not claim any tax deductible deductions.  (e.g. medical expenses, retirement etc)
  • Did not receive interest from a source in South Africa more than –  R23 800 if you are below the age of 65 years; or  R34 500 if you aged 65 years or older.
  • Did not have dividends that were paid to them and they were a non-resident during the 2015 year of assessment.

Employers should start gearing up for the August submission already and ensure that all relevant data is up to date in their payroll systems for the upcoming submission season.

Items to consider while preparing for the August Submission:

a)       Income Protection Policies

Legislation surrounding Income Protection Policy Insurance premiums and the subsequent pay-outs has changed. As promulgated in December 2013 with effective date 1 March 2015 the following changes should have been implemented in your Payroll as of 1 March 2015:

  • Employer-paid premiums to employer owned income protection policies should be taxed as a fringe benefit on the full value of the premium. This fringe benefit should be reported under code 3801 on the employees IRP5.
  • An employee contribution to an employee owned income protection policy is NOT tax deductible.
  • The pay-out of an Income Protection Policy, irrespective if the pay-out is monthly or a lumpsum, will be tax free.

b)  Remuneration Proxy

  • In March 2013 the Income Tax Act was amended to the extent that the remuneration factor in paragraph 9(3) of the Seventh Schedule was changed – This change only affected variable “A” in the calculation of the Residential Accommodation Fringe Benefit.
  • The concept of “Remuneration Proxy” has since been defined in Section 1 of the Income Tax Act and as a consequence applies to the entire Act and all its Schedules. The full definition of the Fourth Schedule remuneration must be used when calculating the remuneration proxy. The impact of this is that values for travel allowance, use of motor vehicle, residential accommodation must be included when calculating this amount.

We are aware of the fact that the SARS guides were inconsistent in the interpretation of 

  • “remuneration proxy”. We have been informed that this has subsequently been corrected.

c)         PAYE BRS Specification

LabourNet have been advised (at this stage!) that no changes will be required for the August 2015 Employer Tax Certificate Submission.

SARS has not made an official statement on this as yet. We will advise all our clients on any new developments if and when they come to light.

Since March 2015, monthly annuity income from an income protection policy has changed from being taxable income, to non-taxable income. Before assessing all the facts, one would simply assume this is great news! However, once examining the facts more closely it becomes clear that the issue is much more complex.

An employee that is booked off work on temporary disability and only earns the income from the income protection policy, will still be “Employed” by the company, but not earn any “Remuneration” and will not be rendering any services to the company in terms of their employment contract.

In terms of the Income Tax Act an “Employee” is defined as:

  • A natural person who receives remuneration or to whom remuneration accrues;
  • A person (including a company) who receives remuneration or to whom remuneration accrues by reason of services rendered by such person to or on behalf of a labour broker;
  • A labour broker;
  • A person or class or category of persons whom the Minister of Finance by notice in the Government Gazette declares to be an

employee;  A personal service provider;      A director of a private company.

Therefore in terms of the Income Tax Act, if the employee does not earn remuneration, the employee is not deemed to be an employee. However the employment status of this employee has not changed and the employee is still employed in terms of the BCEA irrespective of whether remuneration is earned. The employer must not get confused between the Income Tax treatment of this employee and the status of the employee.

Pay Solutions strive to keep our clients up to date with the Income Tax Act to ensure SARS Tax Certificate Submissions are done timeously and hassle-free. Please contact us to find out how we can help your company take the hassle and frustration out of Payroll and HR administration.