Q&A – Payroll Deductions

With less than a month remaining before the end of the 2013 tax year, I thought it will be a good idea to have some Q&A topics to recap on the past year’s tax legislation before the new changes effective 01 March 2013 are announced on Budget day (27 February 2013).

Let’s start with an easy question I received via email earlier today.

This individual wanted to know whether his salary of R3 500.00 per month will be subject to PAYE or any other deductions.

You are welcome to post your answers for the rest of today, I will post my reply tomorrow morning.

5 Comments

Filed under General

5 responses to “Q&A – Payroll Deductions

  1. With the UIF contribution remuneration increase effective 01 october 2012 to R178 464 should be applied, however my Financial Manager queried his contribution to be incorrect. Could you check Pastel calculations for any person above the limit and respond.

  2. Madelein van der Watt

    Hi Dirk

    The maximum contribution per month is R148.72 since 01 October 2012. Anyone earning above the new annual limit should not be contributing more than the maximum. If you upgraded to Pastel Payroll 2013 Update 2e or later or updated the new limit manually, your UIF contribution calculation should be correct

    Regards

    Madelein

    • The transaction calculation for code 8045 UIF – Employee (Actaul Pay) field 17 UIF Income constant is still at old limit R149 736 and therefore deducting R124.78. I am currently working on Pastell Payroll 2013 Update 2 (g).

      • Madelein van der Watt

        Hi Dirk

        You may have installed the upgrade but forgot to activate the changes. Please run the Legislative Release from the File menu to apply the latest legislation included in the software upgrade.

        Regards

        Madelein

  3. Madelein van der Watt

    Should PAYE be deducted from a monthly salary of R3 500.00? Are there any other deductions that should be applied?

    Based on current legislation, if an employee is younger than 65 and earns less than R63 556.00 per year (R5 296.33 per month) no PAYE should be deducted. If an employee is 65 or older and earns less than R99 056.00 per year (R8 254.66 per month) no PAYE should be deducted.

    The employer is however obliged to deduct 1% from the salary for Unemployment Insurance Fund (UIF) contributions. The deduction on a salary of R3 500.00 per month (assuming no commission and travel allowance is included in the salary) should be R35. The employer must contribute an equal amount. Any further deductions like pension or medical aid will be done in accordance with the agreement between the employee and the employer.

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