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 – 205 900||18% of taxable income|
|205 901 – 321 600||37 062 + 26% of taxable income above 205 900|
|321 601 – 445 100||67 144 + 31% of taxable income above 321 600|
|445 101 – 584 200||105 429 + 36% of taxable income above 445 100|
|584 201 – 744 800||155 505 + 39% of taxable income above 584 200|
|744 801 – 1 577 300||218 139 + 41% of taxable income above 744 800|
|1 577 301 and above||559 464 + 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.
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.
- 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 – 95 000||31 332||105.8||37.4|
|95 001 – 190 000||55 894||118.1||46.8|
|190 001 – 285 000||80 539||128.3||51.6|
|285 001 – 380 000||102 211||138.0||56.4|
|380 001 – 475 000||123 955||147.7||66.2|
|475 001 – 570 000||146 753||169.4||77.8|
|570 001 – 665 000||169 552||175.1||96.6|
|665 001 and above||169 552||175.1||96.6|
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