Finance Minister, Enoch Godongwana, will present the 2022/3 Budget Speech on 23 February this year.
We’re not expecting earth-shattering announcements from a payroll perspective in the Minister’s inaugural Budget Speech, but there are a few items on which employers should keep an eye.
Let’s take a look:
1 – The two pot pension proposal
The National Treasury has proposed a two-pot system in which a member’s retirement savings will in future be split into two pots: An accessible pot into which one-third of their contributions will be invested, and an inaccessible retirement pot, where the other two thirds will be invested.
The goal is to enable people to access funds in a financial emergency, while also ensuring that they preserve savings for retirement.
It is not a certainty that these new regulations will be finalised by the time of the Budget.
However, if and when they are implemented, the tax treatment of the two pots might be different, which might have implications for the payroll.
2 – National Minimum Wage
The National Minimum Wage (NMW) Commission has recommended that the NMW be increased by consumer price inflation plus one percentage point (6%) from March 2022.
This would boost the NMW from R21.69 per hour to approximately R23 per hour.
The commission has recommended that domestic worker salaries be increased to 100% of the National Minimum Wage.
Employers should update their systems to cater for the new NMW when it is confirmed.
Bear in mind that some sectors have different wage regulating measures (sectoral determinations, bargaining council agreements or collective bargaining agreements) – employees who fall under these regulating measures should be paid accordingly.
3 – Refreshed regulations on home office and travel allowances
Something I hope to see in the Budget Speech this year is more tax relief for the increased numbers of South Africans who are working from home some or all of the time.
Many employees have had to incur extra costs to work from home and the requirements to claim these expenses are stringent.
In particular, it seems unfair that you need a dedicated area in your house used exclusively for work to claim a portion of your rent and utilities as a work-from-home tax deduction.
The National Treasury said in the 2021 Budget Speech Review document that it would be opening consultations around this matter.
Employers should keep their eyes open for any proposals that will affect the payroll (via allowances paid to their employees), as well as educate employees about which expenses they can claim and what the impact might be on their finances.
4 – Simplified and automated tax administration
There are plans afoot to relieve employees of the need to file individual tax returns and to simplify the annual employer reconciliation (EMP501) submission for employers.
Employers should look out for news and announcements from SARS. This is a good time to start educating your employees about how PAYE (Pay-As-You-Earn) is calculated, which allowances are exempt, which deductions are allowed, and so forth.
This will equip them to understand more about their own tax affairs once the reforms are implemented.
Prepare for the new tax year
Payroll legislation evolves during each tax year and it’s each business’s responsibility to keep up.
Business owners and payroll administrators can keep track by watching webinars, attending industry conferences and seminars.
One of the best ways to keep ahead of the changes is to use a payroll software provider that offers updates for and information about new regulations and laws as they come into effect.
Visit tax.sage.co.za for the latest expert advice, tips and support to help you stay ahead this Tax Year-End.
By Yolandi Esterhuizen, registered tax practitioner & product compliance director, Sage Africa & Middle East