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1 Important Note If your Sage One Payroll software is already in March 2016, your year-to-date amounts will recalculate when you do a start of period into April, unless you make any changes on an employee s record. If changes are made, the PAYE for this employee will recalculate when changes are made. Tax Tables 2016/2017 Income tax: Individuals and Trusts Tax rates (year of assessment ending 29 February 2017) Taxable Income Rates of Tax % of taxable income % of taxable income above % of taxable income above % of taxable income above % of taxable income above and above % of taxable income above Rebates Primary Rebate R Secondary (Persons 65 and older) R7 407 Tertiary (Persons 75 and older) R2 466 Tax Thresholds The tax thresholds at which liability for normal tax commences, are: Persons under 65 R Persons of years R Age 75 and older R Sage One - February

2 Medical Tax Credits (Mtc) Main member First dependant Each additional dependant R286 R286 R192 Subsistence Allowances and Advances Where the recipient is obliged to spend at least one night away from his/her usual place of residence on business and the accommodation to which that allowance or advance is granted to pay for: meals and incidental costs, an amount of R372 per day is deemed to have been expended; incidental costs only, an amount of R115 for each day. The rate for foreign travel will be gazetted soon and can be found on Table for Calculation of Rate per km/travel Allowance Value of the vehicle (including VAT) Fixed cost Fuel cost Maintenance cost (R) (R p.a) (c/km) (c/km) exceeding Prescribed Rate for Reimbursive Kilometres The SARS prescribed rate per kilometer increased from R3.18 to R3.29. Personal Service Provider A Personal Service Provider is taxed at a rate of: 28% for a Personal Service Provider company (remains unchanged) 41% for a Personal Service Provider trust (remains unchanged) SAGE KNOWS Click here to download everything you will need this budget speech Sage One - February

3 The Taxation Laws Amendment Act, 2015 & the Tax Administration Laws Amendment Act, 2015 Introduction The Taxation Laws Amendment Act, 2015 as well as the Tax Administration Laws Amendment Act, 2015 was promulgated on 8 January Here is a summary of the most important changes affecting payroll. Additional medical tax credits Since the move to the medical tax credits system, employees over 65 have been experiencing a decrease in their take-home pay as opposed to their take-home pay when they were still entitled to a deduction. To alleviate this burden, from March 2016, additional medical tax credits will be taken into account for PAYE purposes. If an employee is 65 or older on the last day of February, the additional medical tax credits will be calculated in addition to the normal monthly medical tax credits. The calculation for the additional medical tax credits will be 33.3% of so much of the amount of medical aid contributions which exceed three times the amount of the medical scheme fees tax credit. The total medical aid contributions are taken into account (the employee contribution plus the fringe benefit). At the option of the employer, this will apply to private medical aids as well if the proof of payment has been provided to the employer. Example: Medical aid employee contribution for month: R1500 Medical aid employer contribution for month: R1000 (fringe benefit value is R1000) Medical aid tax credits for the month: R572 (R286 for main member and dependant) Total contributions (employee contribution plus fringe benefit) R2 500 Minus 3 times medical tax credits (3 X R572) R1 716 Equals R784 Times 33.3% 33.3% Additional medical tax credit which reduces the PAYE amount for the month Sage One - February 2016 R

4 Standard employment The definition of standard employment was deleted from the Income Tax Act (paragraph 11B of the Fourth Schedule). Subsequently, the conditions for taxing an employee as temporary/part-time was deleted. However, SARS intends to issue a regulation to stipulate the conditions for taxing an employee at 25%, which might be similar to the current conditions. Taxation of equity instruments (Section 8C shares) Currently there is no PAYE withholding obligation on returns of capital as mentioned in Section 8C(1A) of the Income Tax Act, even though these are profits relating to the instruments acquired due to employment. Effective from 8 January 2016, PAYE must be withheld from these payments. Therefore, PAYE will be withheld when the share vests as well as when there is a return of capital. Tax certificates If an employer ceases to be an employer, then tax certificates should be issued within 14 days instead of within 7 days. Remuneration proxy The remuneration proxy is used to calculate the value of certain fringe benefits. The definition of remuneration proxy is clarified to exclude the residential accommodation fringe benefit value for the preceding year. From March 2016, the remuneration used should exclude the residential accommodation fringe benefit when calculating the fringe benefit value for bursaries residential accommodation and low cost housing. Retirement reforms - Payroll changes effective March 2016 Please take note that the compulsory annuitisation element of the Taxation Laws Amendment Act 2015 (and 2013 and 2014), which affect members of a provident fund, will be postponed for 2 years. However, all the changes to payroll will still go ahead as previously communicated. Please read a summary of the changes here. Sage One - February

5 Sources Taxation Laws Amendment Act, 2015 Tax Administration Laws Amendment Act, 2015 National Budget Speech, 2016 DISCLAIMER Although care has been taken with the preparation of this document, Sage One makes no warranties or representations as to the suitability or quality of the documentation or its fitness for any purpose and the client uses this information entirely at own risk. COPYRIGHT NOTICE Copyright 2016 by Sage One, a division of Sage South Africa (Pty) Ltd hereinafter referred to as Sage One, under the Copyright Law of the Republic of South Africa. No part of this publication may be reproduced in any form or by any means without the express permission in writing from Sage One. Sage One - February