HRTorQue Outsourcing
HRTorQue Reporter
April 2016
 
HRTorQue Reporter Archive
Editor's Note
In this edition we look at the New SARS Tax Clearance System, which should help companies to manage their tax affairs better. We continue our theme on the management of absenteeism and attendance and look at the tax implications of CCMA settlements.

Finally, for info, we have included pieces on the official leave requirements for maternity leave and the information needed for ex-employees to claim UIF (not always as simple as it sounds).

As usual, should you require any further detail on any of these topics, please feel free to contact us.

We do offer a referral scheme for new clients sent in our direction so if you know of anyone looking for outsourced payroll services then please let us know*.

*Terms and conditions apply.
Top of Page
 
Table of Contents
1. New SARS Tax Clearance System
2. Change to Official Interest Rate
3. How Not to Manage Absenteeism
4. What is Attendance Management?
5. Tax Implications of CCMA Settlements
6. Leave Provisions for Maternity Leave
7. Claiming UIF Benefits
8. Contact HRTorQue
Top of Page
 
1. New SARS Tax Clearance System
Author: Dave Beattie (source: SARS)
Editor's Note: We see this as an important development. A clean status is important for companies in South Africa, but traditionally it has been a cumbersome and time consuming process for companies to confirm their status. This new process should hopefully really help.

SARS is rolling out a new tax clearance system in April 2016. The new system makes use of a dashboard (My Compliance Profile) that reflects real time compliance indicators. These indicators take the form of green and red lights with red lights meaning 'non-compliance' and green lights 'compliance'. The Compliance Dashboard is broken down into:
• Registration status
• Submission of returns
• Debt
• Relevant supporting documentation

This new system will issue the taxpayer with a pin number which will eliminate the need for the taxpayer to go into a SARS branch to collect a hard copy of the tax clearance certificate and allow third parties to check the compliance status of the taxpayer.

The Tax Compliance Status (TCS) will also provide a full audit trail for taxpayers where it is indicated that they are non-compliant. A taxpayer will be able to see what is outstanding in terms of returns and money for any tax types for which they are registered.

Taxpayers who feel aggrieved will have the opportunity to challenge the compliance status.

It is important to note that all current (valid) tax clearance certificates will become null and void as soon as SARS has implemented Phase 3 (target date mid-April). It is therefore imperative that taxpayers update their eFiling profile to ensure that companies are properly merged and that the TCS and TCS Verification is selected and activated under 'Rights Groups' on eFiling.

A 'Step by Step Guide to the Tax Compliance Status Functionality on eFiling' document can be downloaded from the SARS website to explain this process in more detail.
Top of Page
 
2. Changes to the Official Interest Rate for Fringe Benefits
Author: Karen van den Bergh
The Official Interest Rate for calculating Fringe Benefits increased by 0.25 % effective 1 April 2016.

Where an employer gives an employee a loan that is less than the official interest rate or interest free, the difference between the two must be treated a taxable Fringe Benefit.

This Fringe Benefit should be processed via the payroll and reported on the Employees IRP5 against SARS Code 3801.

The Official Interest Rate is defined in the Seventh Schedule as the rate of interest that is equal to the Repo Rate, plus 100 basis points (1%).

The repo rate was increased by 0.25 % to 7.0% on the 31st March 2016, and the official interest rate therefore became 8.0% effective 1st April 2016.
Top of Page
 
3. How Not to Manage Absenteeism
Author: Melany Bydawell
It is the view of professional HR practitioners that programmes should not be initiated with the intention to pressurise employees to be at work irrespective of their personal situation (illness, domestic emergencies). Nor should employees be unfairly treated when they absent themselves for legitimate reasons. Managed processes are also definitely not designed to gather evidence with the intention of dismissing employees who are experiencing medical/domestic problems.

It is common practise for managers / supervisors to issue disciplinary warnings to staff where they 'suspect' sick leave abuse even if a doctor's certificate is produced. Line management often challenge these instances with the medical practitioner, resulting in time-consuming and unnecessary conflict.

The fair and effective management of these cases can only be facilitated after the employee's condition has been 'investigated' and 'objectively assessed' via a health assessment. If an employee is found 'fit for duty' and continues to absent himself/herself, you can then terminate his/her services on the 'grounds of incapacity' after due and fair process has been followed.

NB: The laid down requirements in terms of the Basic Conditions of Employment Act and Labour Relations Act of 1995 must be applied in all cases.


Naturally, if an employee is terminally ill due to health or disability, then an ill-health retirement/boarding will be applied in keeping with the company's internal procedures.
Top of Page
 
4. What is Attendance Management?
Author: Melany Bydawell
Aside from a good management practice, it is putting into place structured policies and proven programmes so that everyone knows what is expected of them concerning attendance at work.

Employees should be educated in the company's expectations/standards of acceptable attendance. The importance of good attendance must be clearly communicated to all. Also, information should be provided on company benefits and legal requirements such as rehabilitation assistance.

Issues should be addressed and attended to timeously and an integrated system introduced which incorporates line management/supervisors, human resources, industrial relations, occupational health, shop stewards and counselling services.

If shop stewards are involved in the company's management of absenteeism, in many instances they encourage employees to seek assistance, particularly where there is a realization that by protecting a malingerer or denying a genuinely ill person assistance (he/she may not know that they are ill), they are in fact enabling him/her to continue with behaviour which may lead to the employee's dismissal.
Top of Page
 
5. Withholding Tax on CCMA Settlement Awards
Author: Dave Beattie
As a company that processes payrolls on an outsourced basis we regularly get requests to pay employees in terms of an instruction from the Commission for Conciliation, Mediation and Arbitration (CCMA). Clients forward a copy of a settlement agreement stipulating that the employee be paid a certain amount. When explaining that a tax directive has to be applied for in cases such as these, there is often a backlash from the labour attorney representing the employee. The logic applied by these practitioners is that the award agreement is clear that a certain amount has to be paid by a certain date, and that no deductions can be made from arbitration awards.

In our opinion, amounts received as a result of a CCMA or Labour Court award would be specifically included in 'gross income' in terms of Section 1 - definition of 'gross income', paragraph (d) or (f). With the payment constituting 'gross income' there is an obligation to withhold employee's tax. The amount of employee's tax that the employer is required to withhold must be ascertained by way of a tax directive application to SARS. SARS has published Interpretation Note 26 (March 2004) which provides clear guidelines as to the responsibility put on employers in this regard.

Should you have any questions in this regard kindly contact Dave Beattie on 031 582 7410 or [email protected].
Top of Page
 
6. Leave Provisions for Maternity Leave
Author: Karen van den Bergh
The law makes provision for four consecutive months of maternity leave - one month before the birth of the baby, and three months after the birth. This is, as we are reminded by the South African Labour Guide, four months of unpaid leave.
 
So while the employer is obliged to grant the employee four months of maternity leave, and to let the employee return to work, the employer is not obliged to pay the employee during those four months.
Top of Page
 
7. Claiming UIF Benefits
Author: Dave Beattie
In order to claim UIF benefits one needs to have the following information available:
•  Your 13-digit bar-coded ID or passport.
A UI-2.8 form for banking details.
  -  This needs to be signed by your bank and be accompanied by a stamped bank
   statement to confirm your bank account details.
A form UI-19 to show employment history. This form is to be filled in by your previous employer.
 
-   The Labour Department will check your last four years of work history to calculate your UIF benefit amount. Make sure you have all necessary declarations from previous employers dating back four years. If an employer has failed to issue you with a declaration, they must also fill out a UI-19 form.
A workseeker form.
Your last two pay slips.

It is important to note that you can only claim UIF if your contract has been terminated by your employer. You cannot claim UIF it you decide to leave your job of your own free will.

Even if you have all the above you will also only receive benefits if you are out of work involuntarily and meet the requirements of the Act and if your employer is in good standing with SARS (including up to date on contributions up to date with their electronic declarations to the Department of Labour).
Top of Page
 
8. Contact HRTorQue
Head Office (Durban)
Phone: 031 564 1155  •  Email: [email protected]  •  Website: www.hrtorque.co.za
Address: 163 Umhlanga Rocks Drive, Durban North, KwaZulu-Natal

Johannesburg Office
Ground Floor, West Wing, 6 Kikuyu Road, Sunninghill, 2191
FB
 
Subscribe to HRTorQue Reporter