On 19 July 2017, National Treasury published the following amending legislation:
1. Draft Taxation Laws Amendment Bill (TLAB)
2. Draft Tax Administration Laws Amendment Bill (TALAB)
While the draft legislation still needs to be approved, the following items in the legislation are most relevant to payrolls.
TLAB Main Proposals
1. Bargaining Councils PAYE non-compliance.
Some bargaining councils have for many years not withheld PAYE from members for holiday, Sick leave and end-of-year payments. It is proposed that a levy is introduced as form of limited recovery of the taxes owing. At this stage, the impact on payrolls is uncertain, although there is a strong likelihood that payrolls will have to assist non-compliant councils with calculations going back over 5 years.
2. Introducing further changes to the anti-avoidance rules for certain share schemes, mainly to do with trusts.
3. Removing the 183/60 day tax exemption for South African tax residents earning income from services provided outside of the borders of South Africa.
The purpose of this change is to prevent double non-taxation, but it is certainly not going to be popular.
4. Increasing the tax exemption threshold for bursaries granted in respect of the education of those employees (or their relatives) with disabilities.
Various forms of tax relief for different circumstances are proposed.
5. Clarifying the rules relating to the taxation of employee-based share schemes, and introducing more anti-avoidance rules.
6. Making a number of changes to the taxation rules regarding retirements funds, including the postponement of the annuitisation requirement for provident fun payouts to 1 March 2019.
7. Clarifying that the hours used for the ‘160-hour’ determination for section 4(1)(b)(ii) of the Employment Tax Incentive Act are the hours defined as “ordinary hours” by the Basic Conditions of Employment Act (which would then exclude ‘premium’ hours).
TALAB Main Proposals
1. Spreading the R350 000 pa monetary cap that limits the deduction allowed in respect of contributions to retirement funds over 12 months.
2. Including only the portion of the travel reimbursement that is calculated at a rate per kilometre that exceeds the prescribed rate per kilometre in remuneration.
Note, the 2017 budget proposal to reduce or remove medical tax credits (as discussed in the recent NHI White paper) to help fund the National Health Insurance project, has not been taken forward in the draft Amendment Bills.