What's new in Legislation

2018/2019 Tax Changes

Employment Tax Incentive (ETI) changes

From March 2018, the legislation has been amended to clarify the exact hours to be included in ‘employed and remunerated hours’ in terms of wage. From March 2018, ‘employed and remunerated hours’ in terms of wage refers to ordinary hours only, and additional hours in excess or ordinary hours (such as overtime) must not be taken into account when calculating the ‘employed and remunerated hours’ for wage.

Any unpaid hours (such as unpaid leave) should reduce the employee’s ‘employed and remunerated hours’ for wage, because it is hours for which the employee was employed but not paid remuneration.

In other words:
‘Employed and remunerated hours’ for wage =
+ Ordinary hours
- Unpaid hours

Summary of change:

The ‘employed and remunerated hours’ used to calculate the monthly remuneration and the ETI amount remain unchanged (ordinary hours/employed hours less any unpaid hours plus any additional hours).

Remember: Wage is used to determine if the employee qualifies for ETI (wage test), and remuneration is used to calculate the incentive amount.

Example: The employment contract states that the employee’s ordinary hours of work is 40 hours a week, 8 hours per day for 5 days a week (Monday to Friday). March contains 4 weeks which is 160 ordinary hours (40 × 4). Employee A was appointed on 1 March 2017/2018. Employee A meets all other qualifying criteria in terms of ETI. In the month of March, employee A took 30 hours unpaid leave (unpaid hours) and worked 30 hours overtime (additional hours).

Salary = R2 400.00
Overtime = R675.00
Unpaid Leave = R450.00
Commission = R1 200.00

Unemployment Insurance Fund Contributions (UIF)

The following UIF exemptions are no longer applicable and these employees must contribute towards UIF:

  • learners (learners employed according to section 18(2) of the Skills Development Act), and
  • persons who will be repatriated at the end of the period or service).

Individual tax rates

Click here to download the Tax Rates for employees.

2017/2018 Tax Changes

Employment Tax Incentive (ETI) changes

SARS wants to know how many hours an employee actually spent working during a specific month. Therefore we suggest that you always process the number of hours for overtime worked and unpaid leave taken to allow us to provide a more accurate ETI estimation.

Director’s deemed remuneration

Deemed remuneration will be repealed and directors of private companies (and members of closed corporations) will only be taxed on their actual remuneration.

Retirement Funding Income (RFI)

RFI will be defined as income (taxable earnings + taxable perks + taxable company contributions), however it will include the full value of a travel allowance, company car and a public office allowance on which the employer or pension fund or provident fund contribution towards the pension/provident fund is based on.

To clarify the new proposed legislation:

  • RFI will include 100% of a travel allowance or use of a motor vehicle perk and 100% of a public office allowance and not only the taxable value anymore.

To ensure RFI is calculated when the fund itself contributes the retirement fund contribution on behalf of the members/employees to the fund. This means there will also be a fringe benefit amount even though it is the fund that actually contributes.

Where it will be changed in Sage One Payroll

When opening your fund, ensure that the Travel Allowance 100% is selected in the Calculation will be based on section.

Prescribed rate per kilometre

Where the distance travelled for business purposes does not exceed 12 000 kilometres per annum, no tax is payable on an allowance paid by an employer to an employee up to the rate of R 3.55 per kilometre, regardless of the value of the vehicle.

Where it will be changed in Sage One Payroll

Click on Company…Global payslip definitions and find the Reimbursed kilometres over limit definition. Change the value to R 3.55.

Individual tax rates

Click here to download the Tax Rates for employees.