The South African National Budget Speech, initially scheduled for 19 February 2025, has been postponed to 12 March 2025 due to internal disagreements within the coalition government over proposed tax increases.
This delay has significant implications for payroll systems and employees. Payrolls for March will be based on legacy tax tables because payroll software providers do not yet have certainty. This means March payroll taxes will be different to future months. This could lead to a number of challenges:
- Uncertainty in Tax Rates and Deductions: Payroll systems rely on updated tax codes and deduction tables to calculate employee salaries accurately. The postponement means that any changes to tax rates or deductions will be announced later than usual, leading to potential miscalculations and confusion with employees. It is recommended employers communicate this to employees so they are pre-warned.
- Compliance Challenges: Late announcements of new tax policies or statutory deductions can make it challenging for payroll teams to implement necessary changes promptly, increasing the risk of non-compliance and associated penalties. It is not clear how SARS will deal with the different tax tables used in March and then for subsequent months.
- System Update Challenges: Payroll software may require reconfiguration to accommodate new policies. A compressed timeline due to the delayed budget reduces the period available for testing and implementing these changes, heightening the risk of payroll errors.
To mitigate these challenges, it’s crucial for payroll administrators to stay informed about the new budget schedule and prepare for potential changes. Despite the delay, any proposed changes are expected to apply retrospectively from 1 March 2025.
Regular communication with employees will help manage expectations and address concerns proactively. Please contact [email protected] for assistance with communication and for a consultation