Mirror Payroll. Guidelines for End-Feb 2016 and March 2016 Retirement Reforms. Version 3.0. February 2016

Transcription

1 Mirror Payroll Guidelines for End-Feb 2016 and March 2016 Retirement Reforms. Version 3.0 February

2 Contents Introduction... 2 Legislation up to Feb Mirror Payroll end-feb procedures... 4 Set up 2017 Tax Periods... 5 Load 2017 Tax Tables... 5 Update Base Packages... 6 New Screen: Retirement Reform Summary... 7 New Report : Retirement Fund Analyis... 8 RA Company Contributions... 8 Defined Contribution Funds vs. Defined Benefit / Hybrid Funds... 9 Introduction This guide outlines the end-feb procecures; and also the procedures necessary to implement the new retirement fund legislation as effective from 1 March NB: Ensure to complete all payslips for tax year 2016 BEFORE installing the March 2016 release. All procedures up to the point of exporting the e@syfile csv file, should be completed. If you install the March release, you should NOT still be calculating payslips for the 2016 tax year. That is why this guide recaps the normal Mirror Payroll end-feb procedures, so that you can have peace of mind that you are ready for the March 2016 changes. The procedures are explained via two sample employees; one belonging to a pension fund, the other to a provident fund. We will perform transactions from March 2015 to Feb 2016, which is a good recap of the current retirefund fund legislation. The end-feb procedures are then performed on the same two employees, up to the point of being able to generate the e@syfile.csv file. Then the new release is installed, and you will see what changes are going to be required on the base packages of those employees belonging to any type of retirement fund; and what effect it will have on take-home pay. Note: As at the date of this guide being compiled (Feb 2016), the examples for March 2016 onwards are based on the current 2015/2016 tax tables, giving a useful comparison between the two tax regimes. 2

3 Legislation up to Feb 2016 Pension fund company contributions are not taxable, and own contributions are deductible: Provident fund company contributions are not taxable, BUT own contributions are NOT deductible: 3

4 Mirror Payroll end-feb procedures A) Generate, calculate and seal the last payslips for February as normal, using the average formulas. (Except if you are a labour broker who normally uses the per-period formulas.) B) If you have weekly employees having the last payslips falling on YTD 53, or fortnightly employees having the last payslips falling on YTD 27, unseal such transactions, and recalculate with per-period formulas. C) Before printing/paying the last payslips for Feb, confirm zero over- or under-taxations for all tax periods. Go Main Menu >> Tax Periods >> Tax Year 2016 >> Search: Click [X] Prepare for Last-Period, and then [X] Calc SITE & PAYE & Seal: D) Generate IRP5 Numbers on Mirror. Go Main Menu >> IRP5/IT3(a) Certificates >> 2016 >> Search, and then Assign Certificate Numbers. 4

5 E) Draw EMP501 report. Go Main Menu >> Payroll Reports >> Page 2 >> EMP501 for The totals on payroll should match your actual monthly declarations and payments to SARS. F) View prelim certificates on Mirror. The csv file can later be generated and imported into e@syfile once SARS has opened the filing system, normally early April each year. *** You are now ready to install the March 2016 release. The main steps after installing the new release BEFORE GENERATING PAYSLIPS FOR MARCH - are then to set up new tax periods, to load the new tax tables, and to modify the base packages of employees belonging to any type of retirement fund. Set up 2017 Tax Periods Go Main Menu >> Tax Periods >> Tax Year 2016 >> Search, and then Roll Over at the bottom of the screen. Load 2017 Tax Tables Go Main Menu >> Payroll Global Settings >> Tax Tables >> Load End-Feb

6 Update Base Packages From March 2016 onwards, you must ensure to always update base package in a certain way: company contributions must be set up BEFORE deductions are loaded. Same applies if you are synching base packages via Excel, or if retirement fund transactions are being imported from Excel unto payslips. Per employee, edit the company contribution, and click Auto IRP5. You will notice the company contribution becoming fully taxable now: Then edit the deduction, and also click Auto IRP5. You will notice the company contribution PLUS employee s own contribution being allowed as a deduction: 6

7 New Screen: Retirement Reform Summary This screen is now available per employee, from the Base Package screen: The deduction allowed(benefit claimed) is limited to R350,000 per annum, or 27.5% of taxable income COMBINING Pension, Provident and RAs. The Auto-IRP5 function assumes that these limits will not be exceeded. After setting up a base package, open the above screen and ensure there are no Notes as shown above, and that the combined limit is not exceeded. If the limit is exceeded, remedial action could be to decrease the contributions to the fund, or to load a corrective entry in the base package to adjust the nett taxable income. The new legislaton effectively makes the per-month taxable income the same for pension and provident fund employees: 7

8 New Report : Retirement Fund Analyis Ensure to run this new report before printing and paying payslips. This report is a good double-check for the correctness of the base package changes. RA Company Contributions RAs are now treated similar to pension and provident funds. If you already have RA company contributions, please ensure to specify the new IRP5 code 4475 under payroll global settings >> company contribution types, BEFORE updating base packages: 8

9 Defined Contribution Funds vs. Defined Benefit / Hybrid Funds The guide so far outlined the procedures for employees belonging to defined contribution(dc) funds, where the taxable fringe benefit(fb) equals the company contribution. For defined benefit(db)/hybrid funds, the FB should be calculated according to the formula: FB = A * B C. Where A = Fund Factor issued by the fund, eg. 0.2; B = Retirement Funding Income, and C = Employee s own contribution. To flag an employee as belonging to a DB fund, edit Rates / Statutory / General on the base package, top right, new fields: When you set up the base package, the system will preliminary deem the FB the same as for DC funds. However, when the payslip is calculated and sealed, the system will perform the A*B C calculation. Example of base package: 9

10 Initially deemed same as DC funds: 10

11 The payslip after calc and seal: As per the example above, Taxable FB = 0.2 * 20,000 R1000 = R3000. Then, FB + Employee s Own Contribution is Tax Deductible = R4000. (Benefit claimed back) NB: The system does not block transactions where the benefit claimed back exceeds the 27.5% or R350,000 limits. If this is the case, the Retirement Fund Analysis Report will highlight such. Remedial action could then be to decrease the contributions to the fund, or to load a corrective entry in the base package to adjust the nett taxable income. 11