October 5, 2023

Your PAYE obligations as an employer

As an employer, it is your responsibility to withhold tax from your employees’ salaries and remit it to SARS. Employee tax is a key component of the South African tax system and is the mechanism through which employers withhold and remit income tax on behalf of their employees. Commonly known as PAYE (which stands for Pay-As-You-Earn), it is exactly what it says on the tin—tax needs to be deducted from income as it is earned, and paid over to SARS. This article provides an overview of PAYE, including the basis of calculation, obligations for employers, and rights and responsibilities of […]
August 13, 2021

Why employers should be careful when using ETI schemes

In a Binding Private Ruling issued on 6 July 2021, SARS has made strict ruling on an Employment Tax Incentive Act (ETI) scheme that has been doing the rounds. It is not often that negative rulings get published and it is therefore a unique situation that should serve as a warning to those participating in ETI schemes. The ruling determines that students in the proposed training programme are not considered “employees” as contemplated in the ETI Act and that the applicant in this case will not be entitled to claim an employment tax incentive in respect of any of them. The basic tenets of […]
June 4, 2021

The taxation of medical lump-sums

The South African Revenue Service recently published a draft Interpretation Note relating to the taxation of medical lump sums. Employers often provide various incentives to attract and retain employees with scarce skills. One form of benefit is to cover the medical aid contributions of former employees in retirement. This could be an expensive and risky exercise for a taxpayer as medical inflation may exceed general inflation, or a former employee’s chronic illness can be protracted. In order to counter such a risk, taxpayers may seek to settle this liability upfront. Two common approaches to settling liabilities upfront are: to make a lumpsum payment to an insurer for a policy of […]
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