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| Table of Contents |
1. Budget Highlights for Payroll - March 2018
2. Income Tax Rates and Thresholds 2018 / 19
3. Travelling Allowance
4. VAT Rate Change - Things to Consider
5. Contact HRTorQue
Should you require any further detail on any of these topics, please feel free to contact us. |
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| 1. March 2018 Budget Highlights for Payroll |
| Author: Dave Beattie (Source: SARS) |
Employment Tax Incentive Act and Special Economic Zones (SEZ's)
In the budget speech, the Minister of Finance stated that he has Gazetted a notice creating six Special Economic Zones. The link between ETI and SEZ's is created within Section 6 of the Employment Tax Incentive Act which provides the criteria that must be satisfied before an employee can qualify to generate the tax incentive for the employer. One of those conditions is that of the age of the employee.
The portion of section 6 that is relevant to SEZ's is section 6(a)(ii) which states:
Qualifying employees. An employee is a qualifying employee if the employee- (a)
| (i) |
is not less than 18 years old and not more than 29 years old at the end of any month in respect of which the employment tax incentive is claimed; |
| (ii) |
is employed by an employer operating through a fixed place of business located within a special economic zone designated by notice by the Minister of Finance in the Gazette and that employee renders services to that employer mainly within that special economic zone; or |
The Gazette published by the Minister of Finance now links the six SEZ's to section 6(a)(ii).
This means that there is no age qualification test for employees who render services mainly within one of the six designated SEZ's to an employer whose business is located within that SEZ.
Note that the Special Economic Zones that have been in existence for quite some time were created by the Minister of Trade and Industries, not by the Minister of Finance, and therefore were not linked to the requirements of section 6(a)(ii) of the ETI Act.
It is not yet clear when the effective date of the SEZ's being incorporated into the Employment Tax Incentive Act.
Subsistence Allowance Limits (effective 1 March 2018)
For South Africa, the daily limits are as follows:
Incidental expenses: R128 per day
Meals and incidentals: R416 per day
For any country outside of the borders of South Africa, there is a daily limit per country. The list of these countries with their limits is available on the SARS website.
Medical Tax Credits (effective 1 March 2018)
The monthly values per person are:
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2017/18 |
2018/19 |
| Principal member |
R303.00 |
R310.00 |
| First dependent |
R303.00 |
R310.00 |
| Per subsequent dependent |
R204.00 |
R209.00 |
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| 2. Income Tax Rates and Thresholds 2018/19 |
| Author: Dave Beattie (Source: SARS) |
Tax rates for the period 1 March 2018 to 28 February 2019 for individuals and special trusts:
| Taxable Income (R) |
Rate of Tax (R) |
| 0 - 195 850 |
18% of taxable income |
| 195 851 - 305 850 |
35 253 + 26% of taxable income above 195 850 |
| 305 851 - 423 300 |
63 853 + 31% of taxable income above 305 850 |
| 423 301 - 555 600 |
100 263 + 36% of taxable income above 423 300 |
| 555 601 - 708 310 |
147 891 + 39% of taxable income above 555 600 |
| 708 311 - 1 500 000 |
207 448 + 41% of taxable income above 708 310 |
| 1 500 001 and above |
532 041 + 45% of taxable income above 1 500 000 |
Trusts other than special trusts: rate of tax 45%
Rebates
| Primary |
R14,067 |
| Secondary (Persons 65 and older) |
R7,713 |
| Tertiary (Persons 75 and older) |
R2,574 |
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| Age Tax Threshold |
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| Below age 65 |
R78,150 |
| Age 65 to below 75 |
R121,000 |
| Age 75 and over |
R135,300 |
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| 3. Travelling Allowance 2018/19 |
| Author: Dave Beattie |
Rates per kilometre, which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are determined by using the following table:
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| Value of Vehicle (inc. VAT) (R) |
Fixed Cost (R p.a.) |
Fuel (c/km) |
Maintenance (c/km) |
| 0 - 85 000 |
28 352 |
95.7 |
34.4 |
| 85 001 - 170 000 |
50 631 |
106.8 |
43.1 |
| 170 001 - 255 000 |
72 983 |
116.0 |
47.5 |
| 255 001 - 340 000 |
92 683 |
124.8 |
51.9 |
| 340 001 - 425 000 |
112 443 |
133.5 |
60.9 |
| 425 001 - 510 000 |
133 147 |
153.2 |
71.6 |
| 510 001 - 595 000 |
153 850 |
158.4 |
88.9 |
| Exceeding 595 000 |
153 850 |
158.4 |
88.9 |
Note:
80% of the travelling allowance must be included in the employee's remuneration for the purposes of calculating PAYE. The percentage is reduced to 20% if the employer is satisfied that at least 80% of the use of the motor vehicle for the tax year will be for business purposes.
No fuel cost may be claimed if the employee has not borne the full cost of fuel used in the vehicle and no maintenance cost may be claimed if the employee has not borne the full cost of maintaining the vehicle (e.g. if the vehicle is covered by a maintenance plan).
The fixed cost must be reduced on a pro-rata basis if the vehicle is used for business purposes for less than a full year.
The actual distance travelled during a tax year and the distance travelled for business purposes substantiated by a log book are used to determine the costs which may be claimed against a travelling allowance.
Alternative simplified method:
Where an allowance or advance is based on the actual distance travelled by the employee for business purposes, no tax is payable on an allowance paid by an employer to an employee up to the rate of 361 cents per kilometre, regardless of the value of the vehicle. However, this alternative is not available if other compensation in the form of an allowance or reimbursement (other than for parking or toll fees) is received from the employer in respect of the vehicle. |
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| 4. Value Added Tax Change - Things to Consider |
| Author: Jonathan Aitken |
VAT will be levied at the standard rate of 15% on the supply of goods and services by registered vendors post the April 2018 (The tax rate was 14% until 31 March 2018).
A vendor making taxable supplies of more than R1 million per annum must register for VAT. A vendor making taxable supplies of more than R50 000 but not more than R1 million per annum may apply for voluntary registration. Certain supplies are subject to a zero rate or are exempt from VAT.
The following are important considerations for the change of VAT rate:
Transaction Date - the VAT rate to apply depends on the time of supply rules. In simple terms, this is the date on which the transaction is deemed to occur according to the VAT Act. The general time of supply rule is the earlier of when:
an invoice is issued; or
payment is received.
For most transactions the general time of supply rule will apply. However, some transactions have special time of supply rules. Some examples include supplies between connected persons, fixed property transactions and supplies made under instalment credit agreements. In addition, some rate specific rules could apply when there is a change in the VAT rate. Most transactions which occur on or after 1 April 2018 will be subject to VAT at the new rate of 15% unless a special time of supply rule or a rate specific rule applies.
Prices Quoted or Advertised
All prices advertised or quoted by vendors for taxable supplies must include VAT at the standard rate (unless the supply is zero-rated). Post 1/4/2018 advertised prices must show 15% VAT although the Commissioner for SARS has granted permission under proviso (iii) in section 65 of the VAT Act for a vendor to display a notice that the price does not include VAT at the new rate of 15% and prices will be adjusted at the point of payment.
Agreements
Check agreements you have with suppliers/customers to see whether the agreements contain clauses restricting any change in VAT or impacting the timing of supply of goods and/or services.
Sales and Billing, Debit and Credit Notes
You need to make sure any invoices, receipts, bills reflect VAT at the correct rate of 15% after the 1/4/18 to avoid any disputes with customers or suppliers. Similarly debit/credit notes issues should reflect the VAT rate of the underlying sale or purchase.
Importation of Goods
Registered importers or clearing agents must take care that the customs declarations reflect the new VAT rate of 15% in respect of goods entered for home consumption on or after 1 April 2018.
VAT201 Returns
Care must be taken to make sure the correct rate of VAT is reflected for each period of the VAT201 return which straddles the 1/4/2018.
Rate Specific Rules
There are some specific rules for supplies straddling the 1/4/2018. For example:
Supplies starting before and ending on or after 1 April 2018:
Where goods are delivered or services are performed during a period commencing before 1 April 2018 and ending on or after 1 April 2018, the VAT-exclusive price of the supply must be apportioned on a fair and reasonable basis and allocated to the respective periods. The VAT rate is then applied accordingly. That is, the rate of 14% is applied to the value of supplies before 1 April 2018 and the rate of 15% is applied to the value of supplies from 1 April 2018 onwards. This rule does not apply if the time of supply is triggered before 1 April 2018.
This rate specific rule applies to:
• goods supplied under rental agreements
• goods supplied progressively or periodically
• goods or services supplied in construction activities; and
• services rendered over the period concerned,
but does not apply to supplies of fixed property (including residential fixed property).
Goods delivered or services actually performed on or after 1 April 2018 where the time of supply is triggered between 21 February 2018 and 31 March 2018:
Rate specific rules also apply where the time of supply occurs between 21 February and 31 March 2018 (that is, on or after the date of the announcement of the increased VAT rate, but before the effective date of the increased rate). Under this rule, when goods are delivered on or after 23 April 2018, or services are performed on or after 1 April 2018, but the time of supply is triggered between 21 February and 31 March 2018 as a result of any invoicing or payment in relation to the supply, then VAT at the rate of 15% applies. However, if the goods are delivered before 23 April 2018 (that is, within 21 days after 1 April 2018), or the services are rendered before 1 April 2018, then the supplies concerned will be subject to VAT at 14%.
Further information is available here. |
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| 5. Contact HRTorQue |
Durban
Phone: 031 564 1155 • Email: [email protected] • Website: www.hrtorque.co.za
Address: 163 Umhlanga Rocks Drive, Durban North, KwaZulu-Natal
Johannesburg
Ground Floor, West Wing, 6 Kikuyu Road, Sunninghill, 2191 |
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