Four things that could affect your payroll in the new tax year

Finance minister Enoch Godongwana will present the 2022/2023 Budget Speech on February 23. While he is unlikely to make any earth-shattering announcements from a payroll perspective, there are few items employers should keep an eye on. 

Let’s take a look:

1. The two-pot pension proposal 

The National Treasury has proposed a pension system in which a member’s retirement savings will be split into two pots in the future:

• 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 they preserve savings for retirement. 

It is not a certainty 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 could have implications for your company's 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 an hour to about R23 an hour.

The commission has also recommended that domestic worker salaries be increased to 100% of the NMW.

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 we'll hopefully 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 its 2021 Budget Speech Review 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 the SA Revenue Service.

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.

• About the author: Yolandi Esterhuizen is a registered tax practitioner and product compliance director at Sage Africa & Middle East.

This article was paid for by Sage.