Ghana Changes to Tax Rates

An additional Personal Income Tax band of 35% for monthly income in excess of GHS10 000 was introduced during the Mid-year Budget Statement and came into effect 1 August 2018.

Following feedback from the public after the implementation of the new tax band, Government concluded that some relief from this tax measure is justified. Accordingly, Government reviewed this band to impact monthly income above GHS20 000 at a rate of 30%. The Income Tax Amendment (No. 2) Act, 2018 (Act 979) has since been amended to revise the rates for the taxation of income of resident individuals.

The Income Tax Rates came into effect on 1 January 2019.

Namibia Budget Speech

The Minister of Finance, Hon. Calle Schlettwein, presented the 2019 Budget Speech to Parliament on 27 March 2019.

  • The budget deficit is estimated at N$8.2 billion or 4.1% of GDP and averaging 3.4% over the Medium Term Expenditure Framework (MTEF).
  • Inflation remains stable at 4.4% in February this year, after averaging 4.3% over 2018.
  • Total revenue for 2019/2020 is estimated at N$58.4 billion, 3.0% better than the estimated outturn for 2018/19 and 29.7% of GDP.
  • Expenditure as a proportion of GDP reduced from 42% to 34.9% in FY 2018/19.
  • Old age pensions are increased by N$50 to a monthly grant of N$1300.

The main tax proposals include:

  • Phasing out the current tax incentive for manufacturers and exporters of manufactured goods, repealing the Export Processing Zone and introducing the Special Economic Zones, with a sunset clause for current operators with the EPZ status.
  • Introducing a 10 percent dividend tax for dividends paid to residents.
  • Subject income derived from commercial activities of charitable, religious, educational and other types of institutions under Section 16 of the Income Tax Act to normal corporate tax requirements.
  • Taxing all income earned from foreign sources. Namibian residents will have to declare such income in their annual tax returns.
  • Increase the tax deductibility of retirement fund contributions from the current N$40,000 per annum to 27.5% of income with a maximum of N$150,000 to encourage savings and provisions for retirement.
  • Disallow deductibility of fees and interest paid to non-residents for calculating taxable income until payment of withholding tax paid is proven.
  • Remove VAT zero-rating on sugar.
  • Disallow deductibility of royalties for non-diamond mining entities.
  • No changes in personal or corporate tax rates proposed.

Employee New PAYE Business Reporting Spec for Employer Filing Season

Effective September 2019

SARS published the tax certificate specification document on 26 March 2019.

The document specifies the requirements for the generation of an import tax file for the annual as well as the interim submission. The requirements in this version of the BRS will become effective from September 2019 PAYE interim reconciliation period. To access the new BRS, please click here.

Employer Filing Season – Open 17 April and Closed 31 May 2019

Editor’s Note: For customers using Sage VIP, HRTorQue offers a service to either prepare these on your behalf, or to assist in the preparation.

SARS Moves to New Hosting Platform

As part of its plans to upgrade its Information Technology (IT) systems, SARS will be migrating to a new electronic service hosting platform in April. Taxpayers may experience intermittent downtime from 17h00 on Friday 12 April 2019 to 06h00 on Tuesday 16 April 2019.

The migration will impact the following SARS systems:

  1. SARS eFiling and SARS eFiling app (including registrations, filing, payment and the functionality to upload supporting documents)
  2. SARS [email protected] Employer
  3. SARS website.

Taxpayers can go to any SARS branch or contact the SARS Contact Centre on 080 000 7277 / +2711 602 2093 (during normal operating hours) for assistance during this time.

Please note that SARS eFiling payments cannot be made during the period of downtime, but alternative payment methods will be available.

Employer Filing Season Dates

The employers filing season for tax certificate submissions in respect of the 2018/19 year of assessment normally opens on 1 April and closes on 31 May of each year. Last year, the opening date was delayed to mid-April 2018, and due to the above migration, will this year only open after the migration on 17 April 2019.

It will close on 31 May 2019 as normal.

The SARS PAYE BRS tax certificate specification for February 2019 tax certificates is unchanged from the specification for the August 2018 mid-year tax certificate submissions.

Income Tax Number Application Service

“My employees don’t need an Income Tax number as they earn below the tax threshold and do not pay tax.”

This is a statement that we often hear in the payroll environment. The most recent SARS Business Requirements Specifications (BRS) however clearly states that an Income Tax number for EVERY employee is mandatory. This means that IRP 5 submissions to SARS are rejected if all employees do not have Income Tax numbers. Such rejections cause bottlenecks for us and that could result in the client’s IRP 5 disk not being accepted by the 31 May deadline. 

A late submission carries a 10% penalty calculated on the total PAYE liability for the year. This would be a disaster for any company, particularly considering the fact that such Income Tax numbers could be obtained electronically by registered tax practitioners at a low cost. Using this approach will also mean that employees are not required to visit SARS to hand in manual applications, thereby saving time and effort and improving productivity.

HRTorQue Outsourcing can assist you with the registration of your employees for Income Tax purposes. We can manage the process from start to finish. Our consultant will obtain the employees personal information from your payroll administrator and do the necessary applications. The turnaround time for this process is 24 hours and the cost per application is R 240 plus VAT*. A volume discount of R 150 plus VAT per application will be applied to requests that involve more than 15 applications at a time. 

Should you need assistance in this regard please do not hesitate to contact Dave Beattie on 031 582 7410 or [email protected].

*Prices valid as at 31 March 2019.

Non-compliant Bargaining Councils – Taxable Levy

Bargaining Councils provide various funds for their members including, but not limited to, sick, holiday and retirement funds. Employers contribute to these funds on behalf of those of their employees who are members of the Bargaining Council, and in some cases, the employee-members also contribute to the fund or funds.

For many years, the contributions to, and the pay-outs by, some bargaining councils have not been taxed correctly. After a lengthy investigation, amendments were made to the Income Tax Act, referred to as “Bargaining Council Tax Relief”, in order to give a measure of tax relief to these councils for their historical non-compliance with the intention of turning them into compliant taxpayers in the future, and to provide new taxation rules from 1 March 2019.

Prior to 1 March 2019:

Non-compliant Bargaining Councils must pay a levy of 10% of the total PAYE that should have been deducted from all payments made by them to their members during the period from 1 March 2012 to 28 February 2017.

Post 1 March 2019:

Employer-paid premiums to Bargaining Councils in respect of a scheme or fund as contemplated in section 28 (1) (g) of the Labour Relations Act, as well as payments by Bargaining Councils to members, are now aligned with the principles of the tax rules that govern employer-paid contributions to retirement funds.

In line with this principle, the taxation rules for contributions to funds administered by Bargaining Councils are as follows:

  1. Employer-paid contributions for the benefit of employees will constitute a taxable fringe benefit.
  2. The value of the taxable fringe benefit will be the value of the employer-paid contribution.
  3. Employee-paid contributions are not tax deductible.
  4. If these rules are complied with, payments made by the funds to their members are tax free.

These rules are effective from 1 March 2019.

Note that if the fund administered by the Bargaining Council is a retirement fund, the taxation rules for retirement funds that are effective from 1 March 2016 (and that provide for a tax deduction to reduce the taxable benefit value), must be applied.

Tax Certificates:

The employee-paid contribution is not used for PAYE calculations and is not reported. The employer-paid contribution and the taxable benefit must be reported as follows.

4584Employer-paid Contributions to a Bargaining Council FundOld
4584Employer contributions to a Bargaining Council FundNew
3833Taxable benefit iro Employer contributions to a Bargaining Council FundNew

Proactive HR

What do you mean by “proactive HR”?

For many employers, HR is largely reactive. Responding to events within the organisation as they arise – grievances, high levels of absenteeism, collective action, operational performance issues. By the time issues escalate to this level it requires significant management attention to resolve.

The concept of proactive HR looks to identify and deal with HR issues before they become problematic and use up senior management time. 

We do this in a number of ways:

  1. We use a series of tools to identify “problem” areas before they escalate. This includes analysing data to identify employees who are disillusioned, not engaged or potential trouble-makers. We then, together with local management, proactively manage these employees before bigger issues arise. In our experience, HR ends up looking fantastic through this process because it allows them to:
    – Clearly show senior management where they are adding value;
    – Impress local management with their ability to see into the organisation (and keep them on their toes); and
    – Improve local management performance by identifying and coaching those local managers who were aware of an issue, but were not sufficiently skilled or proactive to manage their team themselves;
  2. Through daily experience with employee arbitrations, we know that employers tend to win matters consistently when they have the right documentation in place, have gone through a proper process with employees and are fair in their dealings with employees. The second pillar of proactive HR is therefore to get the basics right. This can be done at reasonable cost by just following a few easy steps and in the long run results in significantly lower senior management involvement, time and cost.
  3. The majority of collective employee disengagement, frustration and conflict stems from poor or no communication in the organisation. This is often a more difficult area to get the right balance. We use a number of tools to improve HR communication. This makes HR more visible to all and helps to identify bigger issues before they become problems.

If you would like to know more about proactive HR and how HRTorQue can help, please feel free to contact us at [email protected].

HRTorQue Now Offering VIP and Psiber Payroll Support

We are pleased to announce that HRTorQue now has the resources and capability to offer a support service to clients who wish to run their own payrolls on Sage VIP or Psiber, but who need help with material changes.

Our team are available to help with:

  • Payroll Setup
  • IRP5s and EMP501 Reconciliations and Submissions
  • Report Setup
  • Package Changes, e.g. medical aid price increases; new income/deductions