A reminder to all employers that the 2013 PAYE interim reconciliation filing season is currently open and the submission due date is October 31 2012. We have briefly set out below some of the new aspects to take note of.
Medical aid contributions:
· Employer paid contributions to a medical scheme on behalf of an employee who is 65 years and older is a taxable fringe benefit (IRP5 certificate codes 3810, 4005 and 4474).
· Employer paid contributions on behalf of an employee who has retired (due to age, ill-health or other infirmity) is still regarded as tax-free as no value is attached to this benefit (IRP5 certificate code 4493).
·Medical scheme fees tax credits:
o R230 per month where the contributions are made in respect of the taxpayer only;
o R460 per month where the contributions are made in respect of the taxpayer and one dependant;
o R460 per month plus R154 per month for each additional dependant.
· The medical scheme fees tax credits actually taken into account by an employer should be reflected as IRP5 certificate code 4116.
· Where the medical scheme fees tax credits reduce the PAYE to nil the IRP5 certificate code of 08 should be used, namely ‘No tax to be withheld due to medical scheme fees tax credit allowed'.
Employer owned policies:
· Employer paid contributions to an insurer under an insurance policy, whether directly or indirectly for the benefit of an employee, his or her spouse, child, dependant or nominee is a taxable fringe benefit (IRP5 certificate code 3801).
Skills development levies (SDL):
· The medical scheme fees tax credit, which allows for a deduction from PAYE payable, has replaced the previous deduction of the medical tax-free capped amounts from the balance of remuneration. Therefore, an employer will incur an increased SDL contribution for employees younger than 65 years.
Unemployment insurance fund (UIF) contributions:
· The taxable fringe benefit arising in the hands of an employee who is 65 years and older in respect of employer paid contributions to a medical scheme increases remuneration, as defined. Accordingly, this will result in an increase in UIF contributions.
Other new or re-activated IRP5 certificate codes:
· Code 3815 - ‘non-taxable bursaries and scholarships to employees and dependants'
· Code 3922 - ‘compensation lump sum payments in respect of the death of an employee in the course of employment'
· Re-activation of the following codes: 3603 (pension); 3610 (annuity from RAF); 3805 (accommodation fringe benefit); 3806 (services fringe benefit); 3808 (employees' debt fringe benefit), 3809 (taxable bursaries or scholarships).