ICB PAYROLL & MONTHLY SARS RETURNS Learning module 6

COMPLETE PAYE DOCUMENTSLearning Module 6

Pg 179

ICB Junior Bookkeeper: Payroll & Monthly SARS Returns

Complete PAYE documentsPg 179

Tax implications Documents, authorisations & records Correct payments Timeous payments Statutory regulations complied with


Calculation of taxation for individual employees pg 179 & 180

Different tax liabilities for each employee Changes in taxation values and thresholds Taxation on sliding scale Tax rebates are discounts that ensure

individuals with a taxable income below a certain level do not pay tax

Rebates Primary Secondary Tertiary


Employee’s Taxpg 181

Withholding tax End of every wage cycle Tax based on taxable remuneration

received from the employer for the wage/salary cycle converted to an annual equivalent

SARS deduction tableshttp://www.sars.gov.za/Pages/Find-a-Publ.aspx?k=DEDUCTION%20TABLES

Known as PAYE


http://www.sars.gov.za/Pages/Find-a-Publ.aspx?k=DEDUCTION%20TABLES

http://www.sars.gov.za/Pages/Find-a-Publ.aspx?k=DEDUCTION%20TABLES

Gross earnings vs taxable earningsPg 181

Income Tax Act required that correct amount of tax is deducted from each employee’s remuneration every month and paid over to SARS in the form of employees’ tax (PAYE)

Nearly everything employee earns is regarded as taxable

Most allowances are taxable – note company car and car allowances. (80 % vs 20%)

Fringe benefits are not part of earning but they are nevertheless taxable


Gross earnings vs taxable earnings continued

Calculate PAYE on the balance of remuneration after deducting: Pension/retirement annuity fund (employer

deduction) Pension/retirement annuity fund (employee

contribution) Loss of earnings insurance policy paid by employee All contributions to medical aid if employee over 65 Contributions to medical aid subject to limits for

employees under 65 Medical aid tax credits Donations subject to provisions


Gross earnings vs taxable earnings continued pg 182

NB: employer cannot deduct any employee contributions to a provident fund from the balance of remuneration

provident fund noun an investment fund contributed to by employees, employers, and (sometimes) the state, out of which a lump sum is provided to each employee on retirement.

Annual bonuses are taxed Ad-hoc payments are taxable at

employee’s marginal rate


Fringe benefitsPg 186

Non-cash benefits Regular monthly earnings (fringe

benefits): Use of a company car Low interest or interest free loans (subject to

requirements of National Credit Act) Medical aid contributions (over & above

amounts allowable) Items treated at marginal rates:

Acquisition of asset at less than actual value Free or cheap holiday accommodation


Fringe benefits continuedPg 186 & 187

Right of use of a motor vehicleMust use a logbook: http://www.sars.gov.za/AllDocs/Documents/Logbook/2014%20SARS%20Logbook.pdf

3.5 % determined value of the vehicle (less anything paid by employee)

3.25 % if vehicle is subject to a maintenance plan Determined value =

Cost of vehicle (excluding finance charges & interest) Cost of manufacturing vehicle Termination of lease – retail value at time when employer

first used the vehicle 80% fringe benefit classified as remuneration OR 20% fringe benefit IF 80% of the use of the car for

business.ICB Junior Bookkeeper: Payroll & Monthly SARS Returns

http://www.sars.gov.za/AllDocs/Documents/Logbook/2014%20SARS%20Logbook.pdf

http://www.sars.gov.za/AllDocs/Documents/Logbook/2014%20SARS%20Logbook.pdf

Fringe benefits continuedPg 187

Travel allowance 80% fringe benefit classified as remuneration

OR 20% fringe benefit IF 80% of the use of the car

for business.

Medical aid From 1/3/12 full amount contributed by

employer included in taxable income (tax benefit)

Tax credits allowed



Balance of RemunerationPg 188

Calculation of employees’ tax (PAYE) is based on the “Balance of Remuneration” also known as “Taxable Income” (learn this template)

Limits in terms of S11 (k) and S11 (n) regarding Pension Funds deduction from remuneration: The greater of

R1,750 or 7,5% of retirement funding income

Disallowed portions cannot be carried forward Arrear contributions maximum of R1,800 and

may be carried forward.ICB Junior Bookkeeper: Payroll & Monthly SARS Returns

Retirement annuities: Income from capital investment paid in a series of regular payments (WordWeb)

Greater of – R1,750 or R3,500 less pension fund deduction or 15% non-retirement fund income after allowable

deductions except medical expenses & donations to PBO Excludes Capital Gains Lump sums from retirement funds

Disallowed excess may be carried forward to new year

Arrear contributions maximum of R1,800. Excess can be carried forward.




Employee contributions to medical aid funds (S18) When employee makes contributions to

medical aid Allowable tax c redits



Distinguishing between remuneration for PAYE, SDL &

UIFpg 194 & 195 Salaries above threshold = compulsory

registration with SARS for employees’ tax SDL if payroll >R500 000 (DOL) UIF on all employees (DOL) Learn the table on page 195


ICB Junior Bookkeeper: Payroll & Monthly SARS ReturnsICB Junior Bookkeeper: Payroll & Monthly SARS Returns

EMP201 returns

Salary register Benefits Deductions PAYE, SDL & UIF –reach SARS by 7th of

each month EMP501 reconciliation - biannual


Completing payslips Following information must be on payslip:

Employer’s name and address Employee’s name and job title Period of payment Amount of employee’s pay Amount and description of any deductions made Actual amount paid to employee Ordinary pay rate Overtime pay rate Ordinary hours Overtime hours Sunday/Public holiday hours Averaging agreement hours where necessary


Completing payslips continued

Payslips to be provided to employee day of payment or day prior to payment

Deadline for wage employees is date of payment


Meeting deadlines

Salaries usually paid anytime from 24th onwards Salaries paid for a monthly cycle Cut off dates for additions/deductions on payroll Wages paid weekly or fortnightly (usually on a

Friday) PAYE, SDL, UIF by 7th of the month or Friday

preceding the 7th. COID payments once a year Pension fund/medical aid deductions from

employees salary/wage paid on the day salaries paid


Education

ICB PAYROLL & MONTHLY SARS RETURNS Learning module 6