Updates in SimplePay for the 2020/2021 Tax Year

As we enter the new tax year on 1 March, we’d like to remind you that there is no need to do a manual year end as in other payroll systems – simply continue processing payslips into the new tax year.

When you need to do your filing, the correct period will automatically be used and the relevant documents will be generated. For more information, please see our help site.

In addition, our system has already been updated in order to ensure that you are always compliant. We are pleased to inform you that as from 1 March 2020, your payroll will automatically meet all the requirements for the 2020/2021 period, as announced in the 2020 Budget Speech on 26 February 2020. If you are still processing payroll for the 2019/2020 tax year, the old tax tables will still be used, as you’d expect.

Here are some of the most important changes that you will see in your payroll for the coming year:

2020/2021 Tax Rates

The tax rates for individuals have remained the same as last year, with the tax brackets, thresholds and rebates increasing.

Taxable Income (R)Rate of Tax (R)
0 – 205 90018% of taxable income
205 901 – 321 60037 062 + 26% of taxable income above 205 900
321 601 – 445 10067 144 + 31% of taxable income above 321 600
445 101 – 584 200105 429 + 36% of taxable income above 445 100
584 201 – 744 800155 505 + 39% of taxable income above 584 200
744 801 – 1 577 300218 139 + 41% of taxable income above 744 800
1 577 301 and above559 464 + 45% of taxable income above 1 577 300

The tax threshold has increased from R79 000 to R83 100 because the primary rebate has increased from R14 220 to R14 958.

Medical Aid Tax Credit

The medical aid tax credit has increased as follows:

  • The tax credit for the main member and first dependant has increased from R310.00 to R319.00 per month.
  • For every additional dependant, the tax credit has increased from R209.00 to R215.00 per month.

Subsistence Allowance

The ‘tax free’ portion for the subsistence allowance** has increased as follows:

  • The allowance for incidental costs within South Africa has changed from R134.00 to R139.00.
  • The allowance for meals and incidental costs within South Africa has changed from R435.00 to R452.00.

**It is important to note that the subsistence allowance is only a guideline provided by SARS and is not legislated.

Travel Allowances

  • The rate per kilometer for reimbursive travel allowances has increased to 398 cents.
  • The rates per kilometre which may be used in determining the allowable deduction for business travel against an allowance or advance where actual costs are not claimed, are outlined in the following SARS table:
Value of the vehicle (R)Fixed cost (R p.a.)Fuel cost (c/km)Maintenance cost (c/km)
0 – 95 00031 332105.837.4
95 001 – 190 00055 894118.146.8
190 001 – 285 00080 539128.351.6
285 001 – 380 000102 211138.056.4
380 001 – 475 000123 955147.766.2
475 001 – 570 000146 753169.477.8
570 001 – 665 000169 552175.196.6
665 001 and above169 552175.196.6

Foreign Income Exemption

A cap of R1.25 million per year has been placed on the exemption of foreign income earned by South African tax residents. Any foreign employment income earned over and above R1.25 million will be subject to tax for the particular year of assessment.

No changes were announced for the common payroll components of UIF and SDL.

If you have any questions relating to the above changes, you are welcome to email us at [email protected] to assist you with these queries.

The SimplePay Team

National Minimum Wage Increase

The national minimum wage rates, as specified in the National Minimum Wage Act, will increase by 3.8% from R20 per hour to R20,76 for employees. This minimum wage increase will be effective from 1 March 2020.

This means that the hourly rate will need to be changed for employees who are currently earning a wage lower than R20,76 per hour. To review or edit the hourly rate for employees, go to Employees > Bulk Actions > Regular Inputs and select “Basic Salary” and “Hourly Paid” under Filters.

This increase in the hourly rate will also mean an increase in the leave pay for hourly-paid workers as they will be paid extra when paid leave is taken. More information on leave pay can be found on our help site here.

Remember that a change in the ordinary hourly wage will also impact the rate for Sunday pay and public holiday pay. For more information on these, refer to our help page here.

Specific groups of workers will also have an increase in their national minimum wage of 3.8%, as shown below:

  • Farm workers: R18,68 per hour
  • Domestic workers: R15,57 per hour
  • Public works program: R11,42 per hour

Additionally, certain sectors are also covered by the rates contained in the Schedules to this Gazette

Learnership Allowances

The learnership allowances per week for learners specified in Schedule 2 of the National Minimum Wage Act have also increased and come into effect on 1 March 2020. Please refer to page 2 of the Government Gazette linked above for the allowances.

If you have any further queries regarding the impact of this Act on your payroll and on the system, please do not hesitate to contact us.

Team SimplePay

Parental, Adoption and Commissioning Parental Leave

South Africa’s new parental, adoption and commissioning parental leave have officially been signed into law effective 1 January 2020. These new leave types, considered by many as a historic victory for parents, children and families, cater for new parents who do not qualify for maternity leave. This includes fathers, adopting parents and those undergoing surrogacy.

Parental Leave

New parents, other than the mothers giving birth, are entitled to 10 consecutive days of unpaid parental leave once per year when their children are born. If they are a contributor to UIF, they will also have a right to claim for parental leave. They will no longer be allowed to take Family Responsibility Leave for the birth of a child.

Adoption Leave

Adoption leave applies to those adopting a child under the age of two. One parent will be entitled to 10 consecutive weeks of unpaid Adoption Leave, while the other parent will be entitled to Parental Leave (as discussed above).

Commissioning Parental Leave

This leave applies to parents using a surrogate. The primary caregiver will qualify for 10 consecutive weeks’ of unpaid Commissioning Parental Leave, while the other parent will be entitled to Parental Leave (as discussed above).

There are currently no UIF benefits for Adoption and Commissioning Parental leave. These will only come into effect 1 April 2020.

Capturing on SimplePay

To capture this correctly on SimplePay, terminate the employee by ending their service on the system and use an appropriate UIF Code. The following UIF codes have been added for these new leave types:

  • UIF Code 18: Commissioning Parental
  • UIF Code 19: Parental Leave

For additional information and assistance, consult the following help pages:

Team SimplePay