ICB PAYROLL & MONTHLY SARS RETURNS Learning module 6

Learning Module 6
Pg 179
ICB Junior Bookkeeper: Payroll & Monthly SARS Returns

 Tax implications
 Documents, authorisations & records
 Correct payments
 Timeous payments
 Statutory regulations complied with

 Different tax liabilities for each employee
 Changes in taxation values and thresholds
 Taxation on sliding scale
 Tax rebates are discounts that ensure
individuals with a taxable income below a
certain level do not pay tax
 Rebates
 Primary
 Secondary
 Tertiary

 Withholding tax
 End of every wage cycle
 Tax based on taxable remuneration received
from the employer for the wage/salary cycle
converted to an annual equivalent
 SARS deduction tables
http://www.sars.gov.za/Pages/Find-a-Publ.aspx?k=DEDUCTION%20TABLES
 Known as PAYE

 Income Tax Act required that correct amount of
tax is deducted from each employee’s
remuneration every month and paid over to
SARS in the form of employees’ tax (PAYE)
 Nearly everything employee earns is regarded
as taxable
 Most allowances are taxable – note company
car and car allowances. (80 % vs 20%)
 Fringe benefits are not part of earning but they
are nevertheless taxable

 Calculate PAYE on the balance of remuneration
after deducting:
 Pension/retirement annuity fund (employer
deduction)
 Pension/retirement annuity fund (employee
contribution)
 Loss of earnings insurance policy paid by employee
 All contributions to medical aid if employee over 65
 Contributions to medical aid subject to limits for
employees under 65
 Medical aid tax credits
 Donations subject to provisions

 NB: employer cannot deduct any employee
contributions to a provident fund from the
balance of remuneration
 provident fund noun
an investment fund contributed to by employees, employers, and (sometimes)
the state, out of which a lump sum is provided to each employee on
retirement.
 Annual bonuses are taxed
 Ad-hoc payments are taxable at employee’s
marginal rate

 Non-cash benefits
 Regular monthly earnings (fringe benefits):
 Use of a company car
 Low interest or interest free loans (subject to
requirements of National Credit Act)
 Medical aid contributions (over & above amounts
allowable)
 Items treated at marginal rates:
 Acquisition of asset at less than actual value
 Free or cheap holiday accommodation

 Right of use of a motor vehicle
Must use a logbook:
http://www.sars.gov.za/AllDocs/Documents/Logbook/2014%20SARS%20Logbook.pdf
 3.5 % determined value of the vehicle (less
anything paid by employee)
 3.25 % if vehicle is subject to a maintenance plan
 Determined value =
 Cost of vehicle (excluding finance charges & interest)
 Cost of manufacturing vehicle
 Termination of lease – retail value at time when employer
first used the vehicle
 80% fringe benefit classified as remuneration OR
 20% fringe benefit IF 80% of the use of the car for
business.

 Travel allowance
 80% fringe benefit classified as remuneration OR
 20% fringe benefit IF 80% of the use of the car for
business.
 Medical aid
 From 1/3/12 full amount contributed by employer
included in taxable income (tax benefit)
 Tax credits allowed

 Calculation of employees’ tax (PAYE) is based
on the “Balance of Remuneration” also known
as “Taxable Income” (learn this template)
 Limits in terms of S11 (k) and S11 (n) regarding
Pension Funds deduction from remuneration:
 The greater of
 R1,750 or
 7,5% of retirement funding income
 Disallowed portions cannot be carried forward
 Arrear contributions maximum of R1,800 and may
be carried forward.

 Retirement annuities: Income from capital investment paid in a series of
regular payments (WordWeb)
 Greater of –
 R1,750 or
 R3,500 less pension fund deduction or
 15% non-retirement fund income after allowable deductions
 except medical expenses & donations to PBO
 Excludes Capital Gains
 Lump sums from retirement funds
 Disallowed excess may be carried forward to new
year
 Arrear contributions maximum of R1,800. Excess can
be carried forward.

 Employee contributions to medical aid funds
(S18)
 When employee makes contributions to medical aid
 Allowable tax c redits

 Salaries above threshold = compulsory
registration with SARS for employees’ tax
 SDL if payroll >R500 000 (DOL)
 UIF on all employees (DOL)
 Learn the table on page 195

 Salary register
 Benefits
 Deductions
 PAYE, SDL & UIF –reach SARS by 7th of each
month
 EMP501 reconciliation - biannual

 Following information must be on payslip:
 Employer’s name and address
 Employee’s name and job title
 Period of payment
 Amount of employee’s pay
 Amount and description of any deductions made
 Actual amount paid to employee
 Ordinary pay rate
 Overtime pay rate
 Ordinary hours
 Overtime hours
 Sunday/Public holiday hours
 Averaging agreement hours where necessary

 Payslips to be provided to employee day of
payment or day prior to payment
 Deadline for wage employees is date of
payment

 Salaries usually paid anytime from 24th onwards
 Salaries paid for a monthly cycle
 Cut off dates for additions/deductions on payroll
 Wages paid weekly or fortnightly (usually on a
Friday)
 PAYE, SDL, UIF by 7th of the month or Friday
preceding the 7th.
 COID payments once a year
 Pension fund/medical aid deductions from
employees salary/wage paid on the day salaries
paid

ICB PAYROLL & MONTHLY SARS RETURNS Learning module 6

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ICB PAYROLL & MONTHLY SARS RETURNS Learning module 6