There is good news on two fronts for taxpayers in the tax and medical aid-related revisions in the 2009/2010 budget announced by Finance Minister Trevor Manuel this afternoon (Wednesday 11 February).Personal tax threshold and rebate changes are expected to provide relief totalling R13.6-billion to lower income earners during the new tax year.Grant Lloyd, managing director of payroll software specialist Softline Pastel Payroll, commented that lower income earners (less than R150 000 a year) will receive about 50% of the R13.6-billion tax relief during 2009/2010, while high income earners receiving more than R500 000 a year will receive just 12% of the relief value.
There is also more relief for contributors to medical aid schemes.Last year’s cap of R570 for each principal member and first dependant has increased to R625 and each additional dependant from R345 to R380, providing a significant benefit to employees.
"Other good news is that the increased tax thresholds are creeping much closer to the SITE (Standard Tax on Employees) limit of R60 000.By this time next year the thresholds could pass the SITE limit and this could result in SITE falling way completely so that all employees become PAYE (Pay As You Earn) taxpayers. This will simplify tax administration for employers and SA Revenue Services.”
Lower income earners benefit most from the increased tax threshold to R54 200 a year for those under the age of 65 and to R84 200 for those over 65. The annual tax primary rebate increased to R9 756 for taxpayers under 65, while those over 65 receive the primary rebate as well as an additional R5 400.
Another development expected in the 2010/2011 tax year is the dropping of the deemed amount of business travel kilometres. In order to claim business mileage a full logbook of business kilometres travelled will have to be recorded and retained for up to five years.
"Automated payroll and HR software ensures that payrolls are accurate and legally compliant the moment the new budget takes effect,” says Lloyd.A date embedded trigger in the software tax table update ensures that the new rates will only be applied from 1 March, even if the update download is conducted before the end of February."The updating of manual payroll or spreadsheet systems can be challenging and time-consuming for businesses that must have the task completed before 1 March when the new tax rates become effective,” adds Lloyd.
"The moment the update download is triggered on 1 March, the company payroll fully complies with all of the tax and medical aid changes implemented, meeting all of the legal requirements.”
Source: By TaxTALK