Tags: Payroll
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payroll services
With the ongoing burden that COVID-19 has had on the economy, individuals and organisations should be cautious to unknowingly expose themselves to tax implications in their payroll, as SARS seeks to increase its revenue. Our comprehensive payroll services are done accurately to avoid the following common PAYE errors:
  1. Employee Travel Allowance
The two main rules governing this allowance is either that 80% of mileage is for business, and 20% is taxable or vice versa. Most companies prefer the lower inclusion rate, though should they apply the incorrect rate they are guilty of understating their employees’ PAYE liability. These allowances should be accurately logged to avoid this.
  1. Company Vehicles

If an employee makes use of a company vehicle that is leased, they are taxed on the lease and fuel provided monthly. If the vehicle is not under lease, the fringe benefit should be calculated by determining the value of the vehicle, which could yield a substantially different value. Companies should ensure that the correct rule is being applied to avoid unwanted tax exposure.

  1. Disability Benefit Contributions

Previously, employees with disability were eligible to claim an income tax deduction against their disability benefit contributions. Under this legislation, pay outs to employees that had become disabled, were taxed in the hands of the employee. Legislation passed in 2015 altered the process so that disability benefit premiums are taxed as fringe benefits and disability payouts are tax-free. If this change has not been implemented in payroll, companies put themselves at risk with SARS.

  1. Retirement and Risk Benefits
Due to the Retirement Reform that came into effect in 2016, all company contributions to retirement and risk benefits are considered as fringe benefits and taxable through payroll. Tax deductions for this are determined by identifying whether it is an approved or unapproved benefit. Without implementing this appropriately in payroll, companies are at risk for a PAYE deficit.
  1. Remuneration models

Companies often believe that a change in their remuneration model affects their tax obligations. Since tax is applied to individual payroll, changes to this will determine whether employees need to pay more or less tax, not the remuneration model. Companies are therefore encouraged to shift to the remuneration structure that best suits their needs.

To avoid these expensive PAYE errors, we offer small and medium-sized businesses accurate and reliable payroll services. Contact our team for more information.

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