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Non-compliance may lead to abuse in the NPO sector

2015-08-31

More than half of 140,513 NPOs in South Africa were non-compliant with the act. NPOs are required to file annual reports with the Department of Social Development. In addition to the NPO act, these organizations - although tax exempt - are also required to file tax returns with SARS. 

However we realise that volunteers manage most NPOs, with a passion for helping the poor. Under dire and difficult circumstances these volunteers allocate all their time to helping people in need. It is therefore perhaps understandable that compliance ma fall by the way.

Various pieces of legislation imposed hefty regulatory requirements on the NPO sector.It will be a sad dayif NPOs do not receive quality professional support to remain operational. The end result will be that donot funds may not reach the intended recipients.

Disorganised NPOs might not deliver on their legal obligation, which would in turn lead to the sector being accused of a lack of accountability and transparency.

For the review of the accounting process for NPOs' auditors were milking organisations dry to the detriment of the poor. NPOs could save up to R25,000 if they used independent reviewers in the form of accountants to account for their spending instead of using auditing services.

 

EFFECT OF SICK LEAVE ON OVERTIME PAY

2014-07-16

EFFECT OF SICK LEAVE ON OVERTIME PAY
 

Question: How does an employee’s absence due to illness affect overtime pay?

Answer: The basis on which an employee is remunerated may be affected if the employee’s actual working hours are reduced as a result of sick leave.

Brief explanation: In terms of the Basic Conditions of Employment Act an employee is entitled to pay at the overtime rate of one and one-half times the normal rate if the employee works for more than 45 hours per week (While it also applies where the normal daily hours are exceeded, it is unnecessary for the purposes of this discussion). The BCEA is silent on whether paid time for sick leave should be taken into account when calculating overtime pay. If the employee is absent due to illness during a particular week, such hours of absence therefore do not have to be taken into account for the purposes of calculating overtime pay. It would be in order to pay the employee at the overtime rate only to the extent that the employee actually worked in excess of 45 hours in that week.

The following is an example: An employee normally works six days per week, which include 8 hours per day from Monday to Friday, and 5 hours on a Saturday (i.e. 45 hours per week).  In a particular week the employer asks the employee to work an additional 3 hours on the Saturday, which would normally amount to ‘overtime’ and remunerated at the overtime rate. However, in that week the employee takes paid sick leave on the Wednesday. As a consequence, the employee only worked 40 hours. This means that, in addition to being paid a full day’s pay for the day on the employee was sick, the employee will be paid for the 40 hours at the normal rate. In other words, the additional 3 hours for work on the Saturday would not be at the overtime rate but at the normal rate of pay. 

The above could be applied as a general rule, but is subject to the wording of the contract of employment that may contain more favourable provisions with regard to what will be regarded as ‘overtime’.

Further comments: The same principle will apply in other cases where the employee is absent, but still entitled to payment, e.g. annual leave, family responsibility leave, or a public holiday.

 

 

Article written by Jan Truter of Labourwise

 

 

 

Why to conver CC`s to Private Company`s

2013-07-23

 

Why Convert CC`s to Private Company`s

2013-07-23

 

Amendments to the Employment Equity Act

2012-11-15

Amendments to the Employment Equity Act

 

The Employment Equity Amendments Bill published on 19 October 2012 (‘the Bill’) signifies the first amendments to the Employment Equity Act (‘the EEA’) since it came into operation in 1998. The Bill seeks to rectify anomalies and clarify uncertainties that have arisen out from the interpretation of the EEA in the past decade. We will also see the expansion of the powers of the Labour Inspectorate and the jurisdiction of the CCMA.

 

The following amendments proposed by the Bill are worth taking note of:

 

Discriminatory grounds expanded: The grounds for discrimination will no longer be limited to those listed in section 6 of the EEA (race, gender, sex, pregnancy, etc), but will also include discrimination “on any other arbitrary ground”. This change would create consistency with the terminology used in section 187(1)(f) of the Labour Relations Act, 1995 (Act No. 66 of 1995), that prohibits discriminatory dismissals.

 

Psychometric tests: Currently psychological tests may be used on employees (including prospective employees) if they have been shown to be scientifically valid and reliable, can be applied fairly to all employees and is not biased against any employee or group. The Bill introduces an additional requirement that only psychometric tests that have been certified by the Health Professions Council of South Africa, or another body which is authorised to certify such tests, may be used.

 

CCMA to have jurisdiction: At present, all unfair discrimination claims fall within the exclusive jurisdiction of the Labour Court. According to the Bill an employee would also be able to refer the dispute to the CCMA for arbitration if the employee complains about sexual harassment (as a form of discrimination). Any other discrimination claims may be referred to the CCMA for arbitration by lower-paid employees (those earning less than the earnings threshold prescribed under section 6(3) of the BCEA, which is currently at R183008 per year). In the case discrimination claims by higher earning employees, the parties may consent to the referral of a discrimination dispute to the CCMA for arbitration. However, the maximum award that the CCMA can make in respect of damages will be an amount equal to the earnings threshold referred to above. A person affected by an arbitrator’s award in a discrimination case will be entitled to appeal to the Labour Court.

 

Burden of proof: There will be some changes relating to the onus of proof in discrimination claims. In the case where an employee alleges one of the listed discriminatory grounds (race, gender, sex, pregnancy, etc), the onus will be on the employer to prove that discrimination did not take place as alleged, or is rational and not unfair, or is otherwise justifiable. In the case of an allegation of unfair discrimination “based on any other arbitrary ground” the onus will be entirely on the employee.

 

Work of equal value: A new section is introduced in order to deal explicitly with unfair discrimination by an employer in respect of wages and other terms and conditions of employment of employees doing the same or similar work or work of equal value. A differentiation based on a ground envisaged by the EEA will amount to unfair discrimination unless the employer can show that differences in wages or other conditions of employment are in fact based on fair criteria such as experience, skill, responsibility, etc. The Minister of Labour will be empowered to publish a code of good practice dealing with criteria and methodologies for assessing work of equal value.

 

Only apartheid victims to benefit: The definition of ‘designated groups’ is amended to ensure that beneficiaries of affirmative action are limited to persons who were citizens of South Africa before the democratic era, or would have been entitled to citizenship, but for the policies of apartheid, and their descendants. As a result the employment of persons who are foreign nationals or who have become citizens after April 1994, will not assist employers to meet their affirmative action targets.

 

Occupational categories excluded: In order to avoid confusion and simplify the procedures relating to affirmative action, reference will only be made to ‘occupational levels’ in the workforce. Reference to ‘occupational categories’ will be removed.

 

Threshold for ‘designated employers’: The total annual turnover thresholds set for employers in various industries (in order to be classified as a ‘designated employers’ for the purposes of the affirmative action provisions of the EEA), will be increased to three times the current amount. This means that some employers that were obliged to comply by virtue of their turnover will no longer have to do so. Employers that employ 50 or more employees will still be regarded as ‘designated employers’ irrespective of their turnover.

 

Annual reports: All designated employers, including those with 150 and less employees, will have to submit their EE reports annually.

 

Enforcement procedures: Enforcement procedures will be truncated to promote more effective and efficient enforcement. For example, a labour inspector would be able to issue a compliance order without first having to obtain a written undertaking from an employer. The opportunity to object to a compliance order has been removed, but a decision may still be challenged at an appropriate juncture.

 

Assessment of compliance: The factors that may be taken into account in determining whether an employer is implementing employment equity in compliance with the EEA have been revised. The Minister will be empowered to make regulations dealing with the assessment of compliance, including specifying the circumstances under which an employer’s compliance should be assessed by reference to the demographic profile of either the national or regional economically active population. An employer may raise any reasonable ground to justify failure to comply with the implementation of employment equity.

 

Labour brokers: Employees who are placed with a client by a temporary employment service (labour broker) for longer than six months will be deemed to be employees of the client for the purposes of affirmative action.

 

Increased fines: The maximum fines that may be imposed for contraventions of the EEA will be increased threefold (in order to reflect the change in the value of money since 1998). In addition, an employer’s turnover could be taken into account in determining the maximum fine that may be imposed for substantive failures to comply with the EEA.

 

This Bill follows extensive consultation between the Department of Labour, organised business and organised labour. It is therefore unlikely that we will see any significant changes before it becomes law.

 

 

Jan Truter of www.labourwise.co.za

 

 

 

Directors Duties under New Companies Act

2012-09-21

The appointment of directors under the new Companies Act 71 of 2008

The new Companies Act, 71 of 2008 has numerous changes for the appointment, resignation, removal, obligations and duties of directors.

The Act introduces a partial codification of directors’ duties, which includes both a fiduciary duty, and a duty of reasonable care, which operate in addition to existing common law duties

Section 76 of the Act, in particular, requires a director when acting as a director, to act:

Number of Directors

Private Company – 1 Director Minimum

Public Company/Non Profit Company – 3 Directors minimum

Appointment

Disqualification – of persons to act as a director

Exemption – even though disqualified

Termination – on board

Removal – of a director

Board meetings

Liability of directors

Indemnification and Insurance

 

 

SARS logbook

2012-04-22

http://www.sars.gov.za/Tools/Documents/DocumentDownload.asp?FileID=75797

 

Tax Scam Alert

2012-01-25

Scam alert!
Please note that the following email doing the rounds, is a scam:

Tax Refund Notification - After the calculations of your fiscal activity for last year, we have determined that you are eligible to receive a tax refund of R 13,182.52 ZAR. Please download and submit the tax refund request and allow 2-3 days in order to process it. DOWNLOAD to submit your tax refund request Note : A refund can be delayed a variety of reasons, for example submitting invalid records or applying after deadline.
 

Yours Sincerely
Absa Bank

 

 

Conversion of medical aid contribution deductions to medical contribution tax credits

2012-01-23

South African Revenue Service

Dear Employer

CONVERSION OF MEDICAL SCHEME CONTRIBUTION DEDUCTIONS TO MEDICAL SCHEME CONTRIBUTION TAX CREDITS

In an effort to achieve greater equality in the treatment of medical expenses across income groups, the current medical scheme contribution deduction will, for taxpayers aged below 65, be replaced by a medical scheme contribution tax credit. This will be effective from 1 March 2012 as announced by the Minister of Finance, Mr Pravin Gordhan, in the 2011 Budget Speech.

WHAT IS THE PURPOSE OF THE CONVERSION?

The purpose of the conversion is to achieve fairness, as tax relief should be impartial across income groups and fair in proportion to the average direct government spending on health services available to people without medical scheme cover.

WHAT ARE THE CHANGES?

Effective 1 March 2012 the following changes will be introduced:

• A medical scheme contribution tax credit will be available to taxpayers who belong to a medical scheme and are
  below the age of 65, set at fixed amounts per month:
• R216 each per month for contributions made in respect of the employee and one dependant, plus
• R144 per month in respect of each additional dependant.

The non–taxable fringe benefit in respect of medical scheme contributions paid by the employer on behalf of an employee who is 65 years and older and who has not retired from that employer has been repealed. This means that the contribution amount paid by an employer on behalf of an employee who is 65 years and older and has not retired from the employer, will now be a taxable fringe benefit. This is aligned to the treatment of all other taxpayers. However, a person 65 years and older is still entitled to the full medical scheme
contribution paid as a deduction. The net effect on such a person’s tax due is therefore nil.
 
Where an employee has retired from an employer and the employer continues to pay contributions on behalf of the retired employee, the fringe benefit will still be non-taxable.

HOW WILL THIS AFFECT EMPLOYERS?

Employers will be required to:

• Update their payroll systems as from 1 March 2012 in order to ensure the correct  calculation and deduction of payroll taxes – Employees’ tax (PAYE), Unemployment Insurance Fund contributions (UIF) and Skills Development Levies (SDL).

• Inform employees of the impact of these changes on their monthly salary received.

Two new source codes have been introduced as indicated in the table below:

CATEGORY SOURCE CODE DESCRIPTION EMPLOYEES’ TAX DEDUCTION AND REASON CODE

4116 Medical scheme fees tax credit taken into account by employer for PAYE
purposes
 
FRINGE BENEFIT CODE

3815 (3865) Non-taxable bursaries and scholarships to employees and their dependents –
Section 10(1)q – Exempt portion only.

The descriptions of the two existing source codes have been modified:

CATEGORY SOURCE CODE DESCRIPTION DEDUCTION CODE

- 4474 Employer’s medical scheme contributions in respect of employees not included
  in code 4493. As of 1 March 2012 the contributions paid by an employer on
  behalf of an employee 65 years and older and who has not retired from that
  employer, should also be reflected under this code.
- 4493 Employer’s medical aid contributions in respect of an employee who qualifies
  for the “no value” provisions in the 7th Schedule.

The following previously de-activated source codes have now been re-activated. (This will be provided for in the e@syFile™ Employer software, which will be made available for the August 2012 submission.)

These source codes are valid from:

• 1999 – 2009 year of assessment and from the 2013 year of assessment
• 2002 – 2009 year of assessment and from the 2013 year of assessment for the Foreign   Service Income [the source codes denoted in (brackets)].

CATEGORY CODE DESCRIPTION NORMAL INCOME CODES

3603 (3653) Pension (PAYE)
3610 (3660) Annuity from a Retirement Annuity Fund (PAYE)
3805 (3855) Accommodation (PAYE)

FRINGE BENEFIT CODES

3806 (3856) Services (PAYE)
3808 (3858) Employee’s debt (PAYE)
3809 (3859) Taxable bursaries or scholarships (PAYE)

For more information and the explanation of each of these source codes, refer to the Business Requirements Specification:
Medical Scheme Fees Tax Credit available on www.sars.gov.za > Tax Types > Pay-As-You-Earn (PAYE) > What’s New

HOW WILL THIS AFFECT EMPLOYEES (INDIVIDUAL TAXPAYERS)?

Employees may observe an adjusted net take home salary. This adjustment will be due to the medical tax credit which may impact the amount of tax withheld by the employer. Employees may therefore be required to pay more or less employees’ tax on a monthly basis with the implementation of the medical tax credit.

The above changes will become effective from the 2013 year of assessment (1 March 2012 to 28 February 2013) and will effect 2013 Employees Tax Certificates [IRP5/IT3(a)] to be submitted by Employers and 2013 Income Tax Returns (ITR12) to be submitted by taxpayers during the 2013 Personal Income Tax (PIT) Filing Season commencing on 1 July 2013.

FURTHER INFORMATION

For more information on the conversion of medical scheme contribution deductions to medical tax credits, visit the SARS website www.sars.gov.za, call the SARS Contact Centre on 0800 00 SARS (7277), or visit your local SARS branch.

Sincerely

ISSUED ON BEHALF OF THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE

DATE: January 2012


 

 


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