Four weeks left to prepare PAYE submissions

Taxes

Taxpayers have just four weeks to prepare for the SA Revenue Service’s interim pay as you earn (PAYE) submission season, which commences on 1 September. There are important changes that will affect the PAYE reconciliation and submission process.

New legislation that took effect in March this year means medical aid contributions are no longer allowed as a tax deduction for employees under the age of 65. The medical aid capped amounts have also been replaced with medical aid tax credits.

“Companies that have not applied medical aid tax credits for the first six months of the tax year must correct this before they process their last payroll run this month (August),” says Laurica Kok, general manager at Softline Pastel Payroll.

“Those that do not have the correct medical aid legislation in place when submitting interim tax certificates will find that SARS will reject their submissions and they could face penalties for incorrect or late submissions.”

Kok adds that individual income tax reference numbers must be reflected in each submission. If one or more tax certificates do not include the tax reference number, the overall submission will be rejected.

“There are other important changes that will affect interim PAYE reconciliation submissions. These include a new interest rate for low or interest-free loans fringe benefits. Following the July reduction in the repo rate, companies must ensure that they apply the new official interest rate of 6% when calculating fringe benefits for August 2012.”

A new IT3(a) Reason code for tax certificates has been introduced by SARS for non-deduction of PAYE and must be applied on interim tax certificates. Code 08 will indicate a zero PAYE liability due to medical aid tax credits applied.

There are also new source codes for fringe benefits and tax deductions that must be applied to interim tax certificates, replacing the consolidated values SARS required prior to the 2012 tax year.

“Companies using up-to-date automated payroll software will find that all of these SARS PAYE requirements are implemented automatically, ensuring submission compliance.”

via Companies have just four weeks left to prepare SARS interim PAYE submissions | ITWeb.

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Change in depreciation reports higher profit

Clay accounting tokens, Susa, Uruk period.

A change in the policy of accounting for depreciation (from written-down-value method to straight-line-method) enabled tyre manufacturer MRF Ltd overcome the impact of high raw material (rubber) prices and rupee depreciation, and report a higher net profit for 2010-11. (The company follows October-September financial year.)

Net profit for 2010-11 stood at Rs 619.42 crore, against Rs 353.98 crore for last year, thanks to the exceptional item of Rs 404.23 crore, representing “excess depreciation of earlier years.”

via Change in depreciation accounting helps MRF report higher profit

Payment pitfalls for provisional taxpayers

Over the past few years, significant changes have been effected to the provisional tax rules. However, not all provisional taxpayers have kept abreast of these changes. The result? These taxpayers often do not fully understand their tax obligations and end up over-paying or, worse, under-paying their tax and having to fork out significant amounts of cash to pay the South African Revenue Service (SARS) the resultant penalties, additional tax and interest for non-compliance.

This article sets out the more important tax rules of which individual provisional taxpayers should be aware. It also highlights some common pitfalls that are usually overlooked and provides some tax tips.

via Payment pitfalls for provisional taxpayers – Personal Finance Tax | IOL Business