South African Reward Association

Tax Update Budget 201819

Events

bull Tax and Cost to Company Workshop

bull What happens after package determined (art vs science)

bull 14 amp 15 August 2018 - Johannesburg

Tax Morality

National Health Insurance ndash No Budget Announcement

Retirement Reform amp Social Security

bull Promulgated 01 March 2019 (3rd time)

bull Thorny issue of compulsory preservation

Who Pays

Tax Tables

Higher Tax Due to ldquoIncorrectrdquo Inflationary Adjustment (Inflation 53)

Travel Allowance Claim Adjustment

Assumed Total Kilometers 20000 and Business Kilometers 15000

Medical Aid Credits

ldquoOver the next three years below-inflation increases in medical tax credits will help government to fund the rollout of national health insurancerdquo

ldquoThe medical tax credit will be reviewed after the Davis Tax Committee presents its recommendationsrdquo

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Tax Morality

National Health Insurance ndash No Budget Announcement

Retirement Reform amp Social Security

bull Promulgated 01 March 2019 (3rd time)

bull Thorny issue of compulsory preservation

Who Pays

Tax Tables

Higher Tax Due to ldquoIncorrectrdquo Inflationary Adjustment (Inflation 53)

Travel Allowance Claim Adjustment

Assumed Total Kilometers 20000 and Business Kilometers 15000

Medical Aid Credits

ldquoOver the next three years below-inflation increases in medical tax credits will help government to fund the rollout of national health insurancerdquo

ldquoThe medical tax credit will be reviewed after the Davis Tax Committee presents its recommendationsrdquo

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

National Health Insurance ndash No Budget Announcement

Retirement Reform amp Social Security

bull Promulgated 01 March 2019 (3rd time)

bull Thorny issue of compulsory preservation

Who Pays

Tax Tables

Higher Tax Due to ldquoIncorrectrdquo Inflationary Adjustment (Inflation 53)

Travel Allowance Claim Adjustment

Assumed Total Kilometers 20000 and Business Kilometers 15000

Medical Aid Credits

ldquoOver the next three years below-inflation increases in medical tax credits will help government to fund the rollout of national health insurancerdquo

ldquoThe medical tax credit will be reviewed after the Davis Tax Committee presents its recommendationsrdquo

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Retirement Reform amp Social Security

bull Promulgated 01 March 2019 (3rd time)

bull Thorny issue of compulsory preservation

Who Pays

Tax Tables

Higher Tax Due to ldquoIncorrectrdquo Inflationary Adjustment (Inflation 53)

Travel Allowance Claim Adjustment

Assumed Total Kilometers 20000 and Business Kilometers 15000

Medical Aid Credits

ldquoOver the next three years below-inflation increases in medical tax credits will help government to fund the rollout of national health insurancerdquo

ldquoThe medical tax credit will be reviewed after the Davis Tax Committee presents its recommendationsrdquo

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Who Pays

Tax Tables

Higher Tax Due to ldquoIncorrectrdquo Inflationary Adjustment (Inflation 53)

Travel Allowance Claim Adjustment

Assumed Total Kilometers 20000 and Business Kilometers 15000

Medical Aid Credits

ldquoOver the next three years below-inflation increases in medical tax credits will help government to fund the rollout of national health insurancerdquo

ldquoThe medical tax credit will be reviewed after the Davis Tax Committee presents its recommendationsrdquo

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Tax Tables

Higher Tax Due to ldquoIncorrectrdquo Inflationary Adjustment (Inflation 53)

Travel Allowance Claim Adjustment

Assumed Total Kilometers 20000 and Business Kilometers 15000

Medical Aid Credits

ldquoOver the next three years below-inflation increases in medical tax credits will help government to fund the rollout of national health insurancerdquo

ldquoThe medical tax credit will be reviewed after the Davis Tax Committee presents its recommendationsrdquo

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Higher Tax Due to ldquoIncorrectrdquo Inflationary Adjustment (Inflation 53)

Travel Allowance Claim Adjustment

Assumed Total Kilometers 20000 and Business Kilometers 15000

Medical Aid Credits

ldquoOver the next three years below-inflation increases in medical tax credits will help government to fund the rollout of national health insurancerdquo

ldquoThe medical tax credit will be reviewed after the Davis Tax Committee presents its recommendationsrdquo

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Travel Allowance Claim Adjustment

Assumed Total Kilometers 20000 and Business Kilometers 15000

Medical Aid Credits

ldquoOver the next three years below-inflation increases in medical tax credits will help government to fund the rollout of national health insurancerdquo

ldquoThe medical tax credit will be reviewed after the Davis Tax Committee presents its recommendationsrdquo

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Medical Aid Credits

ldquoOver the next three years below-inflation increases in medical tax credits will help government to fund the rollout of national health insurancerdquo

ldquoThe medical tax credit will be reviewed after the Davis Tax Committee presents its recommendationsrdquo

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Example (Shared)

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Employee Personal Inflation Increase

bull VAT 15 (01 April 2018)

bull VAT exemptions removed and increase ad valorem duty (01 April 2018)

bull There 19 zero-rated food items (include dried beans samp maize meal and rice) to bereduced

bull Fuel price

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

More Wealthy or Healthy More VAT

ldquoThe 19 zero-rated food items are only meant to cover basic food items As of 1 April 2018government proposes to amend the VAT Act (1991) to reflect the original policy intent ndash thatonly brown bread and whole wheat brown bread will be zero-rated Products such as rye orlow GI bread which in South Africa are much more expensive and tend to be consumed byricher households will not be zero-ratedrdquo

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Ad Valorem Increase

ldquoEffective 1 April 2018 the maximum ad valorem excise duty for motor vehicles will beincreased from 25 per cent to 30 per cent The classification of cellular telephones will beupdated to include ldquosmart phonesrdquo to ensure they attract ad valorem excise duties

In addition the ad valorem excise duty rates now at 5 per cent and 7 per cent will beincreased to 7 per cent and 9 per cent ensuring that households spending more on luxurygoods contribute proportionately more to revenue Government will also consult on aproposal to replace the flat rate for cellphones with a progressive rate structure based onthe value of the phonerdquo

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Employee Personal Inflation Increase

bull Fuel Price (04 April 2018)

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Standard Adjustments

bull New Subsistence Table (01 March 2018)

ndash Incidental costs R128 per day

ndash Meals and Incidental R416 per day

ndash Updated per country list (highest appears Angola USD303 per day)

bull Housing abatement increase from R75 750 to R78 150 (company owned housing)

bull Official interest rate will be 775 (soon to increase)

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Unchanged Retirement Withdrawal Rates

bull Capital Gains Tax 18

bull Retirement withdrawal rates (normal vs retrenchment death)

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Budget Specific Tax Amendments

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Fruitless and Wasteful Expenditure

ldquoTo ensure proper governance of public entities and encourage accountability governmentproposes that losses or expenditure classified as fruitless and wasteful will not qualify for atax deductionrdquo

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Splitting Medical Credits

ldquoThe medical tax credit consists of two components medical scheme fees for approvedmedical scheme contributions and additional medical expenses for out-of-pocket medicalpayments

Government is concerned that some taxpayers may be excessively benefiting from thisrebate specifically in instances where multiple taxpayers contribute toward the medicalscheme or expenses of another person (for example adult children jointly contributing totheir elderly motherrsquos medical scheme)

Where taxpayers carry a share of the medical scheme contribution or medical cost it isproposed that the medical tax credit should also be apportioned between the variouscontributorsrdquo

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Removing of fringe benefit for preferential interest rates to employees for housing

ldquoIn 2014 legislative changes were made to remove the fringe benefit that previously appliedto employees with remuneration below R250 000 for the acquisition of low-cost housingwith a value below R450 000

In line with government policy to promote the provision of housing it is proposed that therelief from this fringe benefit tax be extended to loans at preferential interest rates whichare solely for housing use made to employees who satisfy the same remuneration criteriafor loans with a value of less than R450 000rdquo

Note

bull Important Announcement for Employee Housing Scheme

bull Low Interest Loans now allowed with no fringe benefit tax

bull Craig Rocherrsquos Savings Calculation = R592223 (R450000 loan 10 pa 20 years)

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

South African Expatriates Working Abroad

ldquoTax treatment of contributions to retirement funds situated outside South Africa

The Income Tax Act currently exempts all retirement benefits from a foreign source foremployment rendered outside of South Africa from taxation

The interaction of this exemption with double taxation agreements and other provisions ofthe Income Tax Act will be reviewed to ensure that the principle of allowing deductiblecontributions only in cases where benefits are taxable is upheldrdquo

Note

bull Important change impacting many South African expatriates working internationally

bull Must look at retirement fund implications

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

South African Expatriates Working Abroad

ldquoAlign tax treatment of preservation funds upon emigration

Upon formal emigration an individual is able to withdraw the full value of their retirementannuity after paying the applicable taxes Government will consider aligning the taxtreatment of different types of retirement fund withdrawals in such circumstancesrdquo

Note

bull Risk and cost assessment for South Africans abroad (surprising how many noncompliant)

bull Additional ldquotax costrdquo was main reason for postponing new law to 01 March 2020

bull Employer comments for not just expatriates but even localised hires who areexpatriates

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Fund Transfers

ldquoIt is proposed that transfers to pension preservation and provident preservation funds becatered for in the legislationrdquo

ldquoRectifying tax anomalies on the transfer of retirement funds

The transfer of fund amounts between or within retirement funds at the same employerhas inadvertently led to a tax liability for members due to the current wording of thelegislation In principle there should be no additional tax consequence for members if thetransfers refer to amounts that have already been contributed to the retirement fundLegislative amendments will be retrospectively introduced to correct these unintended taxliabilitiesrdquo

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Adjusting Official Rate of Interest

ldquoThe ldquoofficial rate of interestrdquo is the current repurchase rate plus 100 basis points (775 percent) This rate is used to quantify the fringe benefit of low interest rate loans provided byemployers and the amount of a donation for low interest loans to trusts by connectedpersons Given that interest rates lower than prime are now uncommon it is proposed thatthe official rate be increased to a level closer to the prime rate of interest This would allowthe benefit of lower rates to be measured with reference to a rate that approximates therate offered by commercial banks to low-risk clients)rdquo

bull Who is still doing this

bull National Credit Regulator (NCR) compliance barrier

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

Important New Developments Past Year

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

UIF

No longer tax exempt 01 March 2018 -

hellip employees under a contract of employment contemplated in section 18 (2) of the Skills Development Act 1998 (Act 97 of 1998) and their employers (Learnership exemption)

hellip an employee and his or her employer where that employee has entered the Republic for the purpose of carrying out a contract of service apprenticeship or learnership within the Republic if upon the termination thereof the employer is required by law or by the contract of service apprenticeship or learnership as the case may be or by any other agreement or undertaking to repatriate that person or if that person is so required to leave the Republic (Expatriate exemption)

Note

bull Registration for expatriates

bull Many employers get learnership claims incorrect

ETI

bull Binding General Ruling 44 13 October 2017 Meaning of 160 hours for purposes ofsection 4(1)(b)

bull Binding General Ruling 47 05 March 2018 Meaning of ldquomonthly remunerationrdquo foremployers remunerating employees on a weekly or fortnightly basis

Subsistence Ruling 291 (24 January 2018)

Relocation Costs

bull BPR 186 Settling-in Allowance 22 November 2017 (confirms once-off repealed)

bull Exempt ndash

Bond registration and legal fees paid in respect of a new residence that has been purchased

Transfer duty paid in respect of the new residence

Cancellation fees paid for bond cancellation on previous residence and

Agentrsquos commission paid on sale of previous residence

New school uniforms

Replacement of curtains

Motor vehicle registration fees and

Telephone water and electricity connection

bull Now taxable (no more allowances)

Payments to reimburse the employee for loss on the sale of a previous residence during transfer and

Architectrsquos fees for the design or alteration of a new residence

Approved Section 18A PBOrsquos

bull httpwwwsarsgovzaClientSegmentsBusinessesTEOPagesApproved-Section18A-PBO27saspx

bull 18995 entities

Subsistence Ruling 291 (24 January 2018)

Relocation Costs

bull BPR 186 Settling-in Allowance 22 November 2017 (confirms once-off repealed)

bull Exempt ndash

Bond registration and legal fees paid in respect of a new residence that has been purchased

Transfer duty paid in respect of the new residence

Cancellation fees paid for bond cancellation on previous residence and

Agentrsquos commission paid on sale of previous residence

New school uniforms

Replacement of curtains

Motor vehicle registration fees and

Telephone water and electricity connection

bull Now taxable (no more allowances)

Payments to reimburse the employee for loss on the sale of a previous residence during transfer and

Architectrsquos fees for the design or alteration of a new residence

Approved Section 18A PBOrsquos

bull httpwwwsarsgovzaClientSegmentsBusinessesTEOPagesApproved-Section18A-PBO27saspx

bull 18995 entities

Relocation Costs

bull BPR 186 Settling-in Allowance 22 November 2017 (confirms once-off repealed)

bull Exempt ndash

Bond registration and legal fees paid in respect of a new residence that has been purchased

Transfer duty paid in respect of the new residence

Cancellation fees paid for bond cancellation on previous residence and

Agentrsquos commission paid on sale of previous residence

New school uniforms

Replacement of curtains

Motor vehicle registration fees and

Telephone water and electricity connection

bull Now taxable (no more allowances)

Payments to reimburse the employee for loss on the sale of a previous residence during transfer and

Architectrsquos fees for the design or alteration of a new residence

Approved Section 18A PBOrsquos

bull httpwwwsarsgovzaClientSegmentsBusinessesTEOPagesApproved-Section18A-PBO27saspx

bull 18995 entities

Approved Section 18A PBOrsquos

bull httpwwwsarsgovzaClientSegmentsBusinessesTEOPagesApproved-Section18A-PBO27saspx

bull 18995 entities

2019 IRP5 Codes on Important Items

The following codes must be applied for 201819 (August 2018 and February 2019)submissions ndash

New Codes

bull The new exemption thresholds for bursaries or scholarships provided by employers toassist disabled persons

bull One new code to report the dividend category which is defined to be remuneration

bull In respect of travel reimbursements the reporting rules for two of the existing codeshave been changed and a new code has been added

Bursary Codes

Normal Bursaries ndash

bull Exempt Basic Education 3815

bull Exempt Further Education 3821

QUALIFICATION DESCRIPTION BURSARY TAX LIMIT PER CHILD PER ANNUM

School Grade R - Grade 12 R20 00000

NQF 1 General Certificate R20 00000

NQF 2 Elementary Certificate R20 00000

NQF 3 Intermediate Certificate R20 00000

NQF 4 National Certificate R20 00000

NQF 5 Higher Certificate R20 00000

NQF 6 DiplomaAdvanced Certificate R20 00000

NQF 7 Bachelors DegreeAdvanced Diploma R60 00000

NQF 8 Bachelor Honours Degree Postgraduate Diploma R60 00000

NQF 9 Masters Degree R60 00000

NQF 10 Doctoral Degree (Professional) R60 00000

Example 1

Example 2

Rem Guys Always Do The Calculation

Dividends As Normal Remuneration

Effective from 1 March 2017 amendments were made to the Income Tax Act to introduceanti avoidance measures dealing with schemes where restricted shares in terms of section8C are allocated to employees through employee share based incentive schemes

As a remedy the 1 March 2017 amendments added three categories of dividends that areEmployment related to the definition of remuneration and a fourth category has now beenadded as paragraph (g)(iv) to the definition of remuneration from 1 March 2018

The new dividend category must be reported on a tax certificate as Code 3723

Employers must apply for directives (application form (IRP3(s)) that specify the PAYE thatmust be withheld from dividends that are not exempt (paragraph (dd) (ii) (jj) and (kk) of theproviso of section 10(1)(k)(i))

Payroll Authors Group

Employee Travel Reimbursement Subject to PAYE

Employeesrsquo tax and reimbursement of travel expenses

To facilitate and simplify the calculation and administration of employeesrsquo tax it is proposed that only theportion of the travel expenses reimbursed by an employer that exceeds the rate or distance fixed by theMinister of Finance by notice in the Gazette in terms of the current law should be regarded asremuneration for purposes of determining employeesrsquo tax

bull Code 3703 still applicable but for all travel

bull Everyone should keep a logbook ()

bull No more up to 12000km tax free reimbursement

bull Below limit everything is exempt but no travel allowance and must be below limit

Example

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Bursary Codes

Normal Bursaries ndash

bull Exempt Basic Education 3815

bull Exempt Further Education 3821

QUALIFICATION DESCRIPTION BURSARY TAX LIMIT PER CHILD PER ANNUM

School Grade R - Grade 12 R20 00000

NQF 1 General Certificate R20 00000

NQF 2 Elementary Certificate R20 00000

NQF 3 Intermediate Certificate R20 00000

NQF 4 National Certificate R20 00000

NQF 5 Higher Certificate R20 00000

NQF 6 DiplomaAdvanced Certificate R20 00000

NQF 7 Bachelors DegreeAdvanced Diploma R60 00000

NQF 8 Bachelor Honours Degree Postgraduate Diploma R60 00000

NQF 9 Masters Degree R60 00000

NQF 10 Doctoral Degree (Professional) R60 00000

Example 1

Example 2

Rem Guys Always Do The Calculation

Dividends As Normal Remuneration

Effective from 1 March 2017 amendments were made to the Income Tax Act to introduceanti avoidance measures dealing with schemes where restricted shares in terms of section8C are allocated to employees through employee share based incentive schemes

As a remedy the 1 March 2017 amendments added three categories of dividends that areEmployment related to the definition of remuneration and a fourth category has now beenadded as paragraph (g)(iv) to the definition of remuneration from 1 March 2018

The new dividend category must be reported on a tax certificate as Code 3723

Employers must apply for directives (application form (IRP3(s)) that specify the PAYE thatmust be withheld from dividends that are not exempt (paragraph (dd) (ii) (jj) and (kk) of theproviso of section 10(1)(k)(i))

Payroll Authors Group

Employee Travel Reimbursement Subject to PAYE

Employeesrsquo tax and reimbursement of travel expenses

To facilitate and simplify the calculation and administration of employeesrsquo tax it is proposed that only theportion of the travel expenses reimbursed by an employer that exceeds the rate or distance fixed by theMinister of Finance by notice in the Gazette in terms of the current law should be regarded asremuneration for purposes of determining employeesrsquo tax

bull Code 3703 still applicable but for all travel

bull Everyone should keep a logbook ()

bull No more up to 12000km tax free reimbursement

bull Below limit everything is exempt but no travel allowance and must be below limit

Example

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

QUALIFICATION DESCRIPTION BURSARY TAX LIMIT PER CHILD PER ANNUM

School Grade R - Grade 12 R20 00000

NQF 1 General Certificate R20 00000

NQF 2 Elementary Certificate R20 00000

NQF 3 Intermediate Certificate R20 00000

NQF 4 National Certificate R20 00000

NQF 5 Higher Certificate R20 00000

NQF 6 DiplomaAdvanced Certificate R20 00000

NQF 7 Bachelors DegreeAdvanced Diploma R60 00000

NQF 8 Bachelor Honours Degree Postgraduate Diploma R60 00000

NQF 9 Masters Degree R60 00000

NQF 10 Doctoral Degree (Professional) R60 00000

Example 1

Example 2

Rem Guys Always Do The Calculation

Dividends As Normal Remuneration

Effective from 1 March 2017 amendments were made to the Income Tax Act to introduceanti avoidance measures dealing with schemes where restricted shares in terms of section8C are allocated to employees through employee share based incentive schemes

As a remedy the 1 March 2017 amendments added three categories of dividends that areEmployment related to the definition of remuneration and a fourth category has now beenadded as paragraph (g)(iv) to the definition of remuneration from 1 March 2018

The new dividend category must be reported on a tax certificate as Code 3723

Employers must apply for directives (application form (IRP3(s)) that specify the PAYE thatmust be withheld from dividends that are not exempt (paragraph (dd) (ii) (jj) and (kk) of theproviso of section 10(1)(k)(i))

Payroll Authors Group

Employee Travel Reimbursement Subject to PAYE

Employeesrsquo tax and reimbursement of travel expenses

To facilitate and simplify the calculation and administration of employeesrsquo tax it is proposed that only theportion of the travel expenses reimbursed by an employer that exceeds the rate or distance fixed by theMinister of Finance by notice in the Gazette in terms of the current law should be regarded asremuneration for purposes of determining employeesrsquo tax

bull Code 3703 still applicable but for all travel

bull Everyone should keep a logbook ()

bull No more up to 12000km tax free reimbursement

bull Below limit everything is exempt but no travel allowance and must be below limit

Example

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Example 1

Example 2

Rem Guys Always Do The Calculation

Dividends As Normal Remuneration

Effective from 1 March 2017 amendments were made to the Income Tax Act to introduceanti avoidance measures dealing with schemes where restricted shares in terms of section8C are allocated to employees through employee share based incentive schemes

As a remedy the 1 March 2017 amendments added three categories of dividends that areEmployment related to the definition of remuneration and a fourth category has now beenadded as paragraph (g)(iv) to the definition of remuneration from 1 March 2018

The new dividend category must be reported on a tax certificate as Code 3723

Employers must apply for directives (application form (IRP3(s)) that specify the PAYE thatmust be withheld from dividends that are not exempt (paragraph (dd) (ii) (jj) and (kk) of theproviso of section 10(1)(k)(i))

Payroll Authors Group

Employee Travel Reimbursement Subject to PAYE

Employeesrsquo tax and reimbursement of travel expenses

To facilitate and simplify the calculation and administration of employeesrsquo tax it is proposed that only theportion of the travel expenses reimbursed by an employer that exceeds the rate or distance fixed by theMinister of Finance by notice in the Gazette in terms of the current law should be regarded asremuneration for purposes of determining employeesrsquo tax

bull Code 3703 still applicable but for all travel

bull Everyone should keep a logbook ()

bull No more up to 12000km tax free reimbursement

bull Below limit everything is exempt but no travel allowance and must be below limit

Example

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Example 2

Rem Guys Always Do The Calculation

Dividends As Normal Remuneration

Effective from 1 March 2017 amendments were made to the Income Tax Act to introduceanti avoidance measures dealing with schemes where restricted shares in terms of section8C are allocated to employees through employee share based incentive schemes

As a remedy the 1 March 2017 amendments added three categories of dividends that areEmployment related to the definition of remuneration and a fourth category has now beenadded as paragraph (g)(iv) to the definition of remuneration from 1 March 2018

The new dividend category must be reported on a tax certificate as Code 3723

Employers must apply for directives (application form (IRP3(s)) that specify the PAYE thatmust be withheld from dividends that are not exempt (paragraph (dd) (ii) (jj) and (kk) of theproviso of section 10(1)(k)(i))

Payroll Authors Group

Employee Travel Reimbursement Subject to PAYE

Employeesrsquo tax and reimbursement of travel expenses

To facilitate and simplify the calculation and administration of employeesrsquo tax it is proposed that only theportion of the travel expenses reimbursed by an employer that exceeds the rate or distance fixed by theMinister of Finance by notice in the Gazette in terms of the current law should be regarded asremuneration for purposes of determining employeesrsquo tax

bull Code 3703 still applicable but for all travel

bull Everyone should keep a logbook ()

bull No more up to 12000km tax free reimbursement

bull Below limit everything is exempt but no travel allowance and must be below limit

Example

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Rem Guys Always Do The Calculation

Dividends As Normal Remuneration

Effective from 1 March 2017 amendments were made to the Income Tax Act to introduceanti avoidance measures dealing with schemes where restricted shares in terms of section8C are allocated to employees through employee share based incentive schemes

As a remedy the 1 March 2017 amendments added three categories of dividends that areEmployment related to the definition of remuneration and a fourth category has now beenadded as paragraph (g)(iv) to the definition of remuneration from 1 March 2018

The new dividend category must be reported on a tax certificate as Code 3723

Employers must apply for directives (application form (IRP3(s)) that specify the PAYE thatmust be withheld from dividends that are not exempt (paragraph (dd) (ii) (jj) and (kk) of theproviso of section 10(1)(k)(i))

Payroll Authors Group

Employee Travel Reimbursement Subject to PAYE

Employeesrsquo tax and reimbursement of travel expenses

To facilitate and simplify the calculation and administration of employeesrsquo tax it is proposed that only theportion of the travel expenses reimbursed by an employer that exceeds the rate or distance fixed by theMinister of Finance by notice in the Gazette in terms of the current law should be regarded asremuneration for purposes of determining employeesrsquo tax

bull Code 3703 still applicable but for all travel

bull Everyone should keep a logbook ()

bull No more up to 12000km tax free reimbursement

bull Below limit everything is exempt but no travel allowance and must be below limit

Example

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Dividends As Normal Remuneration

Effective from 1 March 2017 amendments were made to the Income Tax Act to introduceanti avoidance measures dealing with schemes where restricted shares in terms of section8C are allocated to employees through employee share based incentive schemes

As a remedy the 1 March 2017 amendments added three categories of dividends that areEmployment related to the definition of remuneration and a fourth category has now beenadded as paragraph (g)(iv) to the definition of remuneration from 1 March 2018

The new dividend category must be reported on a tax certificate as Code 3723

Employers must apply for directives (application form (IRP3(s)) that specify the PAYE thatmust be withheld from dividends that are not exempt (paragraph (dd) (ii) (jj) and (kk) of theproviso of section 10(1)(k)(i))

Payroll Authors Group

Employee Travel Reimbursement Subject to PAYE

Employeesrsquo tax and reimbursement of travel expenses

To facilitate and simplify the calculation and administration of employeesrsquo tax it is proposed that only theportion of the travel expenses reimbursed by an employer that exceeds the rate or distance fixed by theMinister of Finance by notice in the Gazette in terms of the current law should be regarded asremuneration for purposes of determining employeesrsquo tax

bull Code 3703 still applicable but for all travel

bull Everyone should keep a logbook ()

bull No more up to 12000km tax free reimbursement

bull Below limit everything is exempt but no travel allowance and must be below limit

Example

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Employee Travel Reimbursement Subject to PAYE

Employeesrsquo tax and reimbursement of travel expenses

To facilitate and simplify the calculation and administration of employeesrsquo tax it is proposed that only theportion of the travel expenses reimbursed by an employer that exceeds the rate or distance fixed by theMinister of Finance by notice in the Gazette in terms of the current law should be regarded asremuneration for purposes of determining employeesrsquo tax

bull Code 3703 still applicable but for all travel

bull Everyone should keep a logbook ()

bull No more up to 12000km tax free reimbursement

bull Below limit everything is exempt but no travel allowance and must be below limit

Example

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Example

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Employee Travel Reimbursement Subject to PAYE

bull No code 3701 (travel allowance fuel card) and 3703 allowed

bull Should normal employees have travel allowance

ndash Only reimbursement = tax free

ndash Allowance = can claim against cost of vehicle

ndash Calculate

bull Company vehicle remains mathematically best option for above 60 - 65 business travel

bull ldquoNo brainerrdquo where above 80 business

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

NED Fees ndash PAYE and VAT

bull Binding General Ruling (Issue 2) on VAT for Non- Executive Directors

bull Are allowed to work through company (SCA case)

bull Financial statements

bull VAT and PAYE ndash FAQ on BGR 40 amp 41 (19 August 2017)

bull Consider information note

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

R350000 limit (not increased)

Commentary in the TLAB 1017

ldquoThe proposed spreading of the R350000 annual cap on retirement fund contributionsfor PAYE purposes means that a person who exceeds the R29167 monthly cap in asingle month but not in others will not be able to benefit from unused amounts in theother monthsrdquo

bull R350 000 remains unchanged

bull R2916667 per monthly maximum

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Example

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Important Items Coming Year

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Tax Court Cases Coming Year

bull Employee Gifts (wedding birthdays conference bags secretary days)

bull Tax return professional fees and expatriate tax calculations ndash fringe benefit tax (KPMG)

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Voluntary vs Involuntary Retrenchment

bull Have you terminated any employees 201718 due to ldquooperational requirementsrdquo

bull What is voluntary (full tax) vs involuntary retrenchment (R500000 exemption table)

bull Remains uncertain ndash SARS considering policy

bull IT13726 (Port Elizabeth Tax Court) ndash Judge Elna Revelas (retrenchment or dismissal)

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Expatriates are not happy

Amending foreign employment income-tax exemption in respect of South African residents

bull 183-and-60 day rule ldquosavedrdquo

bull 01 March 2020 only 1st R1m exempt

bull Then normal tax and tax credits (where applicable)

bull Fringe benefits amp Allowances not exempt

bull Currency differences ndash no tax relief

bull ldquofinancial emigrationrdquo clear way to break tax residency

Thank You

Thank You