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Deduction of UIF from a director’s remuneration

Friday, 24 October 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: I would like to know if UIF must be deducted from a Directors Salary

A: In terms of section 4 of the Unemployment Insurance Contributions Act, the Act applies to all employers and employees.  None of the exclusions in section 4 deals with your example.  Section 5 of the Act, in addition, also refers to every employer and employee – see also section 8.  The Notice issued by the Minister (determination of limit on amount of remuneration for purposes of determination of contribution) also refers to "... an employer to an employee ...”

We submit that the contributions must be made in all instances (and in respect of the same person) where there is an employer and an employee.  An employee is a defined term (in the UIF Act) and must be read with remuneration in the Act – see below.  

"employee" means any natural person who receives any remuneration or to whom any remuneration accrues in respect of services rendered or to be rendered by that person, but excludes an independent contractor 

"remuneration" means "remuneration" as defined in paragraph 1 of the Fourth Schedule to the Income Tax Act, but does not include any amount paid or payable to an employee-

(a) by way of any pension, superannuation allowance or retiring allowance; 

(b) which constitutes an amount contemplated in paragraphs (a), (cA), (d), (e) or (eA) of the definition of "gross income" in section 1 of the Income Tax Act; or

(c) by way of commission;

As director’s remuneration is included in the definition it will be subject to UIF.  

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.



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