Tag Archive: business


Accurate and easily available monthly income statements and balance sheets are critical for the success of any business. Most businesses separate their payroll and accounting departments but for ease of administration it makes good business sense to be able to seamlessly move information from the payroll into the accounting system.

“Instead of having to import and export information, the seamless integration functionality in Sage Pastel My Payroll Online with Sage Pastel My Business Online streamlines and simplifies the process of transferring payroll information to the accounting system. Information is reconciled and despatched with a mouse click.”

“Seamless integration between payroll and accounting systems whereby payroll expenses and liabilities are updated in the accounting system, improves business processes,” says Sage Pastel My Payroll Online business manager Karen Schmikl.

The integration functionality is accessible at no charge to users of the Sage Pastel My Payroll Online  system. It keeps track of any changes to the payroll affecting the journal, notifying users when alterations are made and thereby ensuring that the payroll and accounting systems are always synchronised.

Should users forget to post a processing period they are able to rectify the omission without having to conduct a tedious restore and back-up operation.

Schmickl adds that security functionality ensures that users are valid,  meaning that only users entitled to post journals are able to do so, thus securing access to the information. Back-ups are done every day and with the roll-over of each reporting period.

“With Sage Pastel My Payroll Online accountants don’t have to manually import information and reconcile it, saving time and costs. Companies using the Sage Pastel My Payroll Online system can obtain the online integration at no cost. The time saving and efficiency benefits from this seamless integration are very tangible.”

For the latest legislative news, connect with Sage Pastel Payroll & HR on Twitter (Payroll News), Facebook or LinkedIn.

Philip Meyer

Philip Meyer

By Phillip Meyer, Technology director Sage Pastel Payroll & HR

Connected Services enables SME companies to extend their desktop payroll with an online solution that eases the growing burden of HR managers and payroll administrators.

Connected Services includes a web-based self-service tool that enables employees to manage and maintain their own information online, thereby carrying some of the overall HR administration responsibility. They are able to make online applications for leave, loans, bursaries, travel claims, view their payslips and update personal information no matter where they are so long as they have an internet connection.

The adoption rate of online business software for new entrants into the market is increasing, posing the question of how to bridge the gap between the growing trend towards online software adoption and the traditional desktop application users in the same market segments.

The advantages and conveniences of connected services assist with expediting the many benefits of dual-deployment business software models such as client-side hosted applications with significant connected services capabilities and functionality, together with a seamless upgrade path to ultimately complete cloud-based models facilitated by vendors.

Connected Services has workflow capabilities based on the organisation chart or specific workflow orders per online form. Once an employee applies for leave online and it is management approved, the payroll & HR systems are automatically updated. The software also provides for leave scheduling, particularly practical over traditional December holidays when “skeleton staff” is required. The programme helps to manage minimum staff levels by providing system warnings.

When applying a connected services solution such as Self Service, companies should consider a hosted solution.  This guarantees quick deployment at low implementation cost, meaning companies do not have to invest in additional infrastructure to host the online application. All a company needs is an internet connection and a computer.

Frictionless (automated) payroll legislative updates
Frictionless updates are another example of connected services. This functionality enables traditional desktop applications to seamlessly update over the internet with minimal intervention from the end-user of the software.

Users no longer need to visit a website to download and install updates or CD versions manually as the connected services functionality does it all for them, directly from their payroll software. The days of CD-based updates and disruptive installation and implementation cycles are over.

RSS Feeds within payroll software
Another component of Connected Services allows HR managers and payroll administrators to receive RSS feeds to their desktops notifying them of legislative and tax changes as well as new system software releases so that the company is always on track and up to date.

The internet and, more specifically, cloud-based and online business applications constitute some of the most compelling opportunities for streamlining the way business is now conducted. It is reassuring that the optimisation of internet capabilities will almost certainly not amount to a one-size fits all model.

It is rather the incremental evolution of traditional desktop software, leveraging the internet where it is appropriate and business enhancing, that is playing an important role in the evolutionary shift to complete cloud-based business software provisioning, billing and deployment. This is providing a flexible and extensible migration path to the cloud, taking into account preferences of individual business requirements, as will pure cloud-only offerings.

Reduce payroll fraud and bank rejections with automated payroll software
Opt for a payroll vendor that can offerID number and bank account validations, as well as Employee Credit Checks and the delivery of secure salary EFT payments directly from the payroll software.

Companies need to take steps to avoid paying fake employees and can reduce payroll fraud and bank rejections, ensuring that they avoid stalling when processing salary payments. By combining monthly employee ID Number validation and verification with monthly bank account validation and verification together with secure payment services, companies  ensure that not only are they paying the correct employee through the correct bank account, but also that the payment is expedited in the most secure manner possible.

By validating and verifying the ID Numbers on the payroll, companies create complete peace of mind in the knowledge that not only has their employee provided a valid ID Number but also that the ID Number has been verified as belonging to the associated employee and is recorded on the Department of Home Affairs list of official ID Numbers. This eliminates both fake ID Numbers as well as ID Numbers not associated with the given employee.

With secure salary EFT payments, payment batches can be created automatically within a payroll system without creating the infamous “text files” which on some payroll systems needed to be stored on the hard drive of the Payroll Administrator’s computer and then forwarded or transferred to the authorised user of the banking software for transmission to the relevant bank. Avoiding editable payment  text files improves efficiency and eliminates yet another potential area for payroll fraud, ensuring a tamperproof payment is imported into the banking software.

By performing credit checks on employees, companies and Human Resource managers are provided with valuable information on existing and potential employees including judgments, defaults, notices / alerts, fraud listings / indicators, marital status spouse details and all residential address details. Reports can sourced from the three main credit bureaus in South Africa, namely TransUnion, Experian and XDS.

For more information on in-payroll software ID Number and Bank Account validation and verification services, contact Sage Pastel Payroll & HR and enquire about their Sage Pastel Connect Module.

For the latest legislative news, connect with Sage Pastel Payroll & HR. on Twitter (Payroll News), LinkedIn, Facebook.

Ansie Snyders, Head of the Department for Training and Seminars at Sage VIP

Ansie Snyders

Ansie Snyders

Sage VIP has announced the launch of an e-learning option to its already comprehensive package of training solutions. E-learning is an online solution that enables a user to complete the outcomes of a specific learning program in their own time and pace.

It made business sense to develop an online training solution which is innovative and aligned with world-class technology. According to a 2012 Internet Access in South Africa study, conducted by World Wide Worx, the South African Internet user base had grown from 6,8-million in 2010 to 8,5-million at the end of 2011. World Wide Worx also forecasted in the same study that the strong growth would continue during 2012, and the Internet user base would pass the 10-million mark by the end of that year. Further to this point, the way in which we interact with technology every day is changing and it influences all aspects of our lives, including the way we learn.

E-learning is a cost-effective solution, saving on class fees and travel costs. However, it still requires a commitment from the learner in terms of time and actual completion of the course. The online assessment is an added benefit to Sage VIP’s e-learning solution and at completion of the course; students will receive a certificate of competence.

Furthermore, because this is online training you will need access to a computer with internet connectivity. Once you have registered for the e-learning workshop, a login name and password provided by Sage VIP, will allow you access to the specific workshop.  To be able to complete the course, you will also need Adobe v4.0.1.

Although the training is done online, it will still be practical, interactive and use real-life examples. Sage VIP’s e-learning tools will include online reading material and limited use of video, basically guiding a learner through the relevant screens of the payroll module. There will also be interesting exercises to test the understanding of specific topics and the learner will receive supporting documents for reference purposes.

In conclusion, Sage VIP’s e-learning will make the subject matter come alive in a way that textbooks and the classroom cannot.

Saul Symanowitz (Divisional Manager: Sage Pastel BEE123) , Hon. Rob Davies (Minister: Department of Trade and Industry), Thulani Fakude (Business Development Executive: Sage Pastel BEE123)

Saul Symanowitz (Divisional Manager: Sage Pastel BEE123) , Hon. Rob Davies (Minister: Department of Trade and Industry), Thulani Fakude (Business Development Executive: Sage Pastel BEE123)

Sage Pastel, has donated R7.5 million of software, training and other support interventions to the newly formed Black Management Forum (BMF) SMME Programme.

Launched this week by the Minister of Trade and Industry, Rob Davies, the BMF is extending its support for the development and empowerment of black businesses in the SME sector.

“With a 70% first-year failure rate amongst local start-ups, small business owners need as much support as possible,” said Saul Symanowitz, head of Sage Pastel’s BEE123 division. “Foundational business systems and basic business knowledge are not always part of an entrepreneur’s skill set and the Sage Pastel business toolkit will go a long way to providing that support.”

Sage Pastel will contribute to the BMF SMME Programme by donating 500 toolkits to participating small businesses.  This business support system, which is dubbed the BMF SMME Business Bundle, covers the key areas of accounting, legal, human resources, BEE and marketing. The retail price of the toolkit would be prohibitive for most small businesses.

Sage Pastel has been the leading developer of business and accounting software for small, medium and growing businesses for over 23 years and acknowledges the importance of this sector in building the local economy.  “This donation is part of our on going support for small businesses in South Africa. SMEs play a vital role in economic growth and employment creation. It is essential to ensure that businesses operating in this sector are viable and sustainable in the long term.” comments Symanowitz.

Minister Davies stated that his department supports the development of strong and productive enterprises, endorsing President Jacob Zuma’s position of the need to develop black industrialists. He also indicated the importance of encouraging symbiotic relations between small and big business, and using BEE codes to ensure small business development and the growth and expansion of a healthy SMME sector.

By Steven Cohen, managing director, Sage Pastel Accounting

Steven Cohen

Steven Cohen

To succeed in business, exceptional service is essential. Everyone says they do it but I question its true impact, particularly when I consider that everything is automated these days. In the world of electronic communications, everyone auto-signs their emails with a warm and fuzzy salutation, your birthday is recorded in a customer relationship management (CRM) system that triggers a congratulatory SMS on the appropriate date and it’s seldom that you get to talk to a real person at a call centre anymore. The result of the, so-called benefits of technology is a techno-void between a company and its customers.

The Extraordinary Customer Experience

Sage, the global parent of Sage Pastel Accounting has launched a new Extraordinary Customer Experience initiative which will benefit its 4 million clients globally. The programme’s key objective is to build real relationships with customers using an old-fashioned method; people.

Initially I was cynical about the advantages such a plan would bring to the business. Our local contact centre is manned by real people and it’s considered one of the best – it wins local and international awards all the time and is currently a regional finalist in three categories of the highly regarded Contact Centre World Awards run by ContactCentreWorld.com.

However, our new service initiative requires more than just people to offer extraordinary customer service; it’s their attitude and approach to the customer that is so crucial. In addition to the programme’s need for passion, accountability, collaboration and being enterprising when dealing with customers, I am drawn to its requirements for creating working conditions that encourage people to succeed!

It’s all about attitude

As a business leader, I’ve always said that it’s important to stimulate the thinking of those around you. This can only be applied if you understand that attitude and not just aptitude is essential when employing at any level in the organisation. I like to see the interview process as a gate that only lets exceptional people in – and it’s part of my management ethos to pay more for a good person. So, I think I am on the correct path to getting the customer service experience right but now the hard work really begins.

For the Extraordinary Customer Experience to become a reality we need to change the way we think about customer service. I want us to own every customer experience and not simply sell stuff to people because we have targets to meet. We need to build real relationships with all of our clients and recognise that a new client or a satisfied contact centre customer is not just another successful transaction. In addition it’s important to define what we are delivering to our customers in relation to what our customers think they are getting – a disconnect at this point is the difference between exceptional or deficient service.

By: Christophe Letellier, CEO for Sage ERP X3

Christophe Letellier

Christophe Letellier

When approaching the subject of the Cloud, there is a choice between being strongly positive or enthusiastic. The wave in favour of the Cloud is so strong that views which attempt to even mildly address the need or even the relevance of the Cloud could make you look like a supporter of the past. But this has always been true with new technologies or business models; just look back to the early 2000s.
Cloud technology is not a revolution; it’s an evolution that materialises the maturity of the Internet. By definition the evolution will take time, a long time, when in contrast a revolution could change our world in weeks or months. As customers and suppliers, it has already taken us 15 years to get to where we are today with the Internet. I would bet it will take even longer before everything runs from the Cloud
The Cloud, in my opinion, brings many good things to the software industry. It means solutions can be developed more quickly, agile development becomes standard and seamless upgrades a given. Software vendors are changing and the Cloud is the trigger, but the change is embraced because it creates value for customers.
On a similar note, the Cloud implies a different business model that is based on usage. The ‘per month, per user’ pricing model is the first step that will evolve into fully consumption-based pricing. Once again, it’s good for our customers. The Cloud will also open the ERP world to many more users than today. Because it’s more flexible and web based, we can expect that the Cloud will provide much easier access to an ERP system. C-level executives will, at last, benefit from the mine of data that is created by their ERP system. This is particularly true in mid-sized companies where the CEO is in the operational driving seat and today drives almost blind! Casual users will also be more at ease and will be able to contribute more. This is true for occasional internal users, but also for external users like partners, suppliers or customers. The 25-year-old concept of an extended enterprise now becomes a reality.
All these changes can bring great value to our customers and it’s important that we aim to deliver on these promises. The Cloud is not the means to get there, but only the trigger. It has changed mindsets and offers a technical solution, but we can deliver the very same value to our customers via other delivery mechanisms. If I look at the ERP world for instance, there are many examples of strong adoption of financials in the Cloud when manufacturing, that requires significant customization and close connection to shop floor control systems, looks less attractive. Does it mean that our customers should be put on the side of the road? Today a vast majority of mid-sized companies do use their ERP systems on fat clients without web access, when such systems have been available for over 10 years now. Why should we expect that adoption of full cloud solutions will be that much faster? And does this mean that our customers shouldn’t have access to the benefits listed above?
Adoption of the Cloud is a long journey. Cloud will become a standard in one or two decades. What do we do for our customers in the meantime?
My conviction is that although the Cloud will not dominate for some time in the ERP space, it will profoundly change mindsets and drive software vendors in a new direction. Having sold web-based products like Sage ERP X3 for over 10 years, Sage is not afraid of this evolution. On the contrary, we welcome this change towards flexibility and openness. This has always been our motto. Building hybrid systems and leveraging the best of the on-premise and cloud worlds will help the transition, drive adoption, and create true value for our customers. Our customers are pragmatic so we have to be inventive.

In the 2013 Budget speech, Finance  Minister, Pravin Gordhan, emphasised that one of Government’s most pressing development challenges is to expand work opportunities for young people: “There has been extensive debate on how this should be done and the answer is that a wide range of measures are needed, including further education, training, public employment opportunities and support for job creation in the private sector.”

Learnerships help young people to obtain a formal qualification, while gaining relevant workplace experience. While there are many benefits to the prospective learners, there are also advantages to the employer implementing the learnership. Employers have the peace of mind that their employees are not away from the office for extended periods of time and while they are away, they are improving their relevant work based skills to be more productive and efficient at what they are employed to do.

In 2002, the Government introduced a Learnership Allowance Incentive, for employers to:

  • Encourage job creation by reducing the cost of hiring and training employees through learnerships
  • Promote skills development
  • Encourage human capacity development

However, there is a very specific legislation that guides the process and it poses certain challenges. Tax Talk spoke to Rob Cooper, tax expert and Director of Legislation Updates and Proposed legislation at Sage VIP, part of the Sage Group plc, about some of the recent changes made to the Learnership Allowance Incentive.

Cooper says: “To encourage employers to participate in learnerships, an allowance in the form of a deduction from the company’s taxable income has been available for many years. To qualify for the learnership allowance, employers must register the learnership with SETA. There is a R30 000 allowance at the start of the learnership, and a further R30 000 upon the successful completion. The value of the actual incentive has always been influenced by the when the learner is registered and the learner’s failure to complete. However, with new legislation introduced in January, the scenario will change.”

Cooper explains: “In the past, the allowance (deduction) was only allowed during the year in which the learnership agreement was officially registered with SETA.  For a variety of reasons, registration often takes a couple of months and this resulted in reduced value.”

“In future, employers will no longer have to register learnerships from the moment of the inception. A learnership will be deemed to have been registered for the duration of the agreement that falls within the employer’s year of assessment. However, it is necessary that the learnership is registered within 12 months after the year of assessment.”

“The second issue relates to failure to complete. In the past, the allowance was not granted if the learner previously failed to complete a prior registered learnership of similar nature to the new learnership.  Typically, the employer was not aware of prior learnerships (i.e. the information was not easily accessible or the quality of the information was not reliable, as it is dependent on feedback from other employers). Attempts to obtain this information also delayed the registration process.”

“In future, employers will no longer have to find out details of the individuals’ learnerships entered into with other employers.  Learnership allowances will only be refused if the learner failed the same type of learnership with the same employer (or associated institution).”

”Implementing a learnership programme within your company will definitely contribute to job creation, especially for young people. However, it is important to keep track of all the legislative changes.  Make sure that your company is operating within the parameters of the basic conditions of employment and its legal requirements. It is crucial to being a responsible citizen,” concludes Cooper.

For more information, employers are invited to attend the Sage VIP, Payroll and Tax Seminar. You can book your seat at:  www.vippayroll.co.za.

Rob Cooper is a tax expert and Director of Legislation Updates and Proposed legislation at Sage VIP, part of the Sage Group plc. 

Rob Cooper

Rob Cooper

“Changes proposed to South Africa’s Basic Conditions of Employment Act (BCEA), Labour Relations Act (LRA) and Employment Equity Amendment Bill (EEAB) will have a significant impact on how employers conduct their business in 2013,” says Cooper.

“In the draft Employment Equity Amendment Bill (EEAB), specific attention should be paid to the concept of equal pay for work of equal value, which can result in a new form of unfair discrimination.”

Cooper explains: “In cases where employment conditions, including remuneration, are applied differently to employees who do the same or similar work, then the employer must be able to show that the differences are based on fair criteria such as experience, skills, responsibility and qualifications. If the employer cannot do this, the differentiation would constitute unfair discrimination.”

“In practice it would mean that if a company employed factory workers on a permanent basis and at times of high demand took on additional workers from a labour broker and they worked side by side doing the same job, then both permanent and labour broker-supplied workers must be paid at the same rate,” says Cooper.

“Because the employer must pay the labour broker his fee on top of the wages for the workers, the result will be that brokered labour will cost more than permanent labour. This is logical and the premium that the employer must pay for flexibility.”

“Importantly, the intention is to align the Employment Equity Act with other general labour laws that need to be applied in cases where an individual supplied to a client by a labour broker is seen as an employee of that client.  One can only assume at this early stage that these employees, supplied by the labour broker, will have to be included in the client’s equity plan as well as in the labour broker’s equity plan.”

“The draft Employment Equity Act further changes the way in which companies implement affirmative action. According to Cooper, the groups of people who benefit from the affirmative action provisions will be limited to those who were South African citizens before democracy (April 1994) or to those who were prevented by the policies of apartheid from becoming citizens before 1994, and their descendants. This means that the employment of foreign nationals or those who became citizens after the democratic era (April 1994), will not assist employers to meet their affirmative action targets.”

Employment Services Bill

According to Cooper, the Employment Services Bill is another very important piece of legislation for employers to be aware of as it moves towards finalisation.

“The overall intention of this brand new piece of legislation is to empower the Department of Labour to provide a comprehensive range of employment services (free of charge) to members of the public in an attempt to achieve the Government’s objectives of: more jobs, decent work and sustainable livelihoods.  Any initiative that reduces unemployment is to be welcomed,” says Cooper.

The Government is aiming at making employment services open and accessible to all. This includes the following:

  1. Registering work vacancies and seekers, matching resulting opportunities, and facilitating the placement of seekers with employers or other work opportunities.
  2. Provision of advisory services for training, social security benefits, dealing with vulnerability, vocational and career counselling, assessment of work seekers to determine suitability, and improving work-related life skills.

UIF (Unemployment Insurance Fund) legislation

Changes to the UIF legislation have been pending for quite some time and will hopefully move through Parliament towards the end of this year.  Broadly, the proposed changes envisage increasing the value of the UIF benefit, as well as extending the grace period during which benefits can be claimed, from 6 to 18 months,” says Cooper.

He says there is also an intention to remove certain exclusions of which there are no details but hopes that this will include the exclusion of commission from the remuneration on which the contribution is calculated, which results in commission being excluded from the value of the contribution and the benefit.  Unemployed people, who were earning a low basic salary plus commission, are negatively affected by a benefit that is in line with only their basic salary.

Cooper is encouraging employers to attend Sage VIP’s Payroll and Tax Seminar in March and April 2013. “The seminar is regarded by many as a definitive guide to the changes in payroll and tax legislation and we endeavour to present it in a practical and interactive manner that does not focus on the legal aspects alone. The presentation will also aim at communicating future trends that will impact payroll and HR,” said Cooper.

By Rob Wilkie, CFO Sage South Africa

Rob Wilkie

Rob Wilkie

Whilst last year’s budget was all about infrastructure expansion investment, this year the emphasis is in keeping the budget deficit in check.

Mr Gordhan announced in his 2013 budget speech that tax collections would be R16.9 billion less than the estimate made in the 2012 budget. This was largely as a result of weaker economic growth, labour unrest and lower commodity prices. Economic growth for 2012 is expected to be sluggish at 2.7% with mining strikes and stoppages costing the economy approximately R15.3 billion.

As a consequence, the budget deficit increased to 5.2% of GDP. In other words, government spending exceeded tax revenue collected by R185 billion. In business terms, government made an operating loss in 2012.

In order to reduce the deficit (or rate of cash burn) Gordhan said that he would not increase taxes or impose drastic austerity measures, but would instead reduce the rate at which public spend was escalating. He said he would do this by utilising government’s contingency reserve (R23.5 billion); reprioritising expenditure to strategically important initiatives (R52 billion); and reducing financial mismanagement and corrupt expenditure (6% of GDP).  If successful, the growth in government spending would be reduced to 2.3% in real terms (7.8% including the effects of inflation) and the budget deficit brought back to 3.1% over 3 years. Additional borrowings of R497 billion would be required to fund the deficit, increasing government debt to R1,7 trillion or 40% of GDP. Gordhan said that he was comfortable with this level of debt and SA’s ability to meet its debt service commitments.

If government were a business the budget would read as follows:

  • Business SA has made a loss equivalent to 5.2% of its turnover.
  • It does not want to increase its prices as existing customers may stop buying and new customer acquisitions decline.
  • To return to profitability (or reduce its loss) Business SA therefore has to reduce its cost base or at least slow its cost growth.
  • It will do this by a combination of resource reallocation to its priority initiatives and reduction of inefficiencies and wasteful expenditure.
  • Until such time as it is able to return to profitability Business SA will utilise its cash resources and credit lines to fund its losses.

It is a balancing act.  Do you cut deep; stop the cash burn but risk sustainability and preparedness for the next cyclical upturn? Or do you rather focus on efficiency gains and investment priorities, live with losses and more debt, but enhance sustainability and competitive edge?

Government has chosen the later, both for socio economic and structural reasons, but also because it has the capacity to borrow in order to sustain deficits. I believe they have got the balance right in this budget. It is now up to government to show the political will and commitment necessary to implement it.

Issued on behalf of Sage VIP Payroll

Finance Minister, Pravin Gordhan’s Budget Speech on Wednesday, 27 February 2013, introduced several changes that will have a direct impact on payroll and HR across South Africa. Leading payroll and HR solutions provider, Sage VIP, says that administrators will have to ensure that their payroll systems are updated as from 1 March 2013 to reflect the stipulated changes. “Not implementing these changes, in the first period of the new tax year, will result in incorrect PAYE calculations,” says Karen Schmikl, Legislation Manager at Sage VIP, part of the Sage Group plc.

The tax tables for individuals and special trusts for the year ending 28 February 2014 are:

Taxable Income (R)

Rate of Tax (R)

0 – 165 600 18% of taxable income
165 601 – 258 750 29 808 + 25% of taxable income above 165 600
258 751 – 358 110 53 096 + 30% of taxable income above 258 750
358 111 – 500 940 82 904 + 35% of taxable income above 358 110
500 941 – 638 600 132 894 + 38% of taxable income above 500 940
638 601 and above 185 205 + 40% of taxable income above 638 600

Schmikl says the tax rebate amounts have also had changes in line with inflation: “The primary tax rebate amount has been adjusted to R12 080, while a secondary rebate for persons of 65 years and older is set at R6 750.  A tertiary rebate for persons of 75 years and older is R2 250.”

The tax thresholds have also been adjusted. Below the age of 65, the tax threshold has been set at R67 111; ages 65 to 74 now have a tax threshold of R104 611; while ages 75 and over have a tax threshold of R117 111.

“An employee is entitled to receive a subsistence allowance when the employee is obliged to spend at least one night away from his or her usual place of residence. The value of the deemed allowance or advance where the accommodation is in South Africa has been amended to R319 per day for meals and incidental costs and R98 per day for incidental costs only. The schedule of rates for accommodation outside the country has been published on the SARS website,” says Schmikl.

The medical tax credits have also been increased to R242 for the main member and first dependent and R162 for every additional dependent thereafter.

Travel allowance costs have also been adjusted. “The SARS deemed rate per kilometre increased from R3.16 to R3.24.  The fixed cost, fuel and maintenance cost values have been amended and it is advisable to recalculate the value of all employees’ travel allowances from 1 March 2013,” says Schmikl.

Value of the vehicle (incl. VAT)

Fixed cost

Fuel cost

Maintenance cost

 (R) (R p.a.) (c/km) (c/km)
0 – 60 000 19 310 81.4 26.2
60 001 – 120 000 38 333 86.1 29.5
120 001 – 180 000 52 033 90.8 32.8
180 001 – 240 000 65 667 98.7 39.4
240 001 – 300 000 78 192 113.6 46.3
300 001 – 360 000 90 668 130.3 54.4
360 001 – 420 000 104 374 134.7 67.7
420 001 – 480 000 118 078 147.7 70.5
exceeding 480 000 118 078 147.7 70.5

The Residential Accommodation Fringe Benefit abatement value has increased from R63 556 to R67 111. Schmikl says many companies provide their employees with housing assistance or home loans. This imposes a fringe benefit calculation, which is burdensome if the company transfers the house to the low-income employee.  However, Treasury intends to review the fringe benefit tax calculation to lower the burden, which is positive news.

“There were speculations that an additional tax bracket would have been added for higher income earners. However, with the small number of individuals in the top income bracket, this would not have made a significant contribution to the revenue required,” says Schmikl.

A positive outcome from the budget speech is the fact that Parliament will be considering tax incentives for employers, as part of a scheme to share the costs of employing young work seekers. However, it is still unclear how and when this will be implemented.

According to Schmikl, the Retirement Reform might be implemented in March 2014. “This will result in fringe benefit calculations when an employer contributes towards the employees’ retirement funds which include pension and retirement annuity funds. A 27.5% deduction is proposed on contributions with a maximum annual deduction of R350 000,” says Schmikl.

She continues: “In going forward, employers should also take note of the impact of the Taxation Laws Amendment Act, 2012, on payroll systems. This includes a change in the way employers deal with rental cars as company cars and the taxation of variable remuneration. It is advisable for employers to ensure that these changes are being applied to their payroll system, to keep the company compliant and up to date with legislation.

For more information on the Budget Speech or to reserve a seat for the Annual Payroll Tax Seminar, please visit www.vippayroll.co.za

Sidebar 1

Rental Cars as Company Cars

Under normal circumstances, vehicles provided as company cars to employees are owned (purchased or leased) by the employer. Currently, if the company rents a vehicle on a medium term basis and grants the use of it to an employee, the market value is used as the determined car value. Going forward, SARS wants to provide for scenarios where the vehicle is rented by the employer and is subject to an operating lease.

As from 1 March 2013 the actual cost incurred under that operating lease, plus fuel cost is used as the fringe benefit value, as long as the rental arrangement can be viewed as an operating lease. There are specific conditions to comply with, for it to be seen as an operating lease:

  • The employer must rent the vehicle from a company that is in the business of renting cars
  • The vehicle may be rented by the public for a period of less than a month
  • The cost of maintaining the vehicle must be done by the rental company
  • Risk of the loss or damage must not be assumed by the employer

The taxation of company cars, which are not subject to an “operating lease”, stays unchanged.

Sidebar 2

Variable Remuneration

Remuneration should be taxed when it is paid to the employee or when it is accrued (whichever happens first). This principle sometimes causes problems as a payment can be accrued in a tax year but only be quantified and paid in the next tax year. From 1 March 2013, variable remuneration should be taxed in the month that it is paid to the employee and not when it accrues. This is quite a significant change as this will relief the administrative burden of managing these payments.

Variable remuneration is defined as:

  • Overtime
  • Bonuses
  • Commission
  • An allowance or advance paid in respect of transport expenses such as a travel allowance
  • Leave Paid out
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