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.
Our system will be up to date in time for next month in order to ensure that you are always compliant. We are pleased to inform you that from 1 March 2021, your payroll will automatically meet all the requirements for the 2021 / 2022 period, as announced in the 2021 Budget Speech on 24 February 2021. If you are still processing payroll for the 2020 / 2021 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:
2021 / 2022 Tax Rates
The tax rates for individuals have remained the same as last year. However, government has increased the personal income tax brackets by 5% on average, which is above the rate of inflation (this being approximately 4%). In other words, all individual taxpayers will pay less income tax this year than in the previous year.
|Taxable Income (R)||Rate of Tax (R)|
|1 – 216 200||18% of taxable income|
|216 201 – 337 800||38 916 + 26% of taxable income above 216 200|
|337 801 – 467 500||70 532 + 31% of taxable income above 337 800|
|467 501 – 613 600||110 739 + 36% of taxable income above 467 500|
|613 601 – 782 200||163 335 + 39% of taxable income above 613 600|
|782 201 – 1 656 600||229 089 + 41% of taxable income above 782 200|
|1 656 601 and above||587 593 + 45% of taxable income above 1 656 600|
All three categories of tax rebates (under 65 years old; 65 – 75 years old; and over 75) have increased by 5% from the previous year to the current year under the budget.
The tax threshold has increased from R83 100 to R87 300, translating to the primary rebate increasing from R14 958 to R15 714.
In addition to the primary rebate, the secondary rebate and tertiary rebates have been increased to R8 613 and R2 871 respectively.
Medical Aid Tax Credit
The amount that can be deducted due to medical aid tax credit has increased as follows:
- The tax credit for the main member and first dependant has increased from R319 to R332 per month.
- For every additional dependant, the tax credit has increased from R215 to R224 per month.
The Unemployment Insurance Fund (UIF) contribution ceiling was announced to be increasing from R14 872,00 to R17 711,58 per month. UIF is calculated as 2% of an employee’s remuneration for UIF purposes, split equally between the employer and employee. Remuneration for UIF purposes is the employee’s remuneration, less certain exclusions such as commission. Under the budget speech, the maximum UIF contribution for each party is, therefore, R177,11 a month (R354,22 in total).
Despite the announcement in the budget speech of this proposed change, for it to be effected, the alteration to the monthly UIF contribution limit needs to be published in the Government Gazette. Therefore, this change is not yet effective and shouldn’t be reflected on payroll.
The SimplePay Team has received confirmation from a reliable source that the UIF contribution ceiling change will be postponed. As such, we will continue to apply the original UIF contribution ceiling threshold of R14 872 until such a time as the increase has been confirmed to be effective.
The ‘tax free’ portion of Subsistence Allowance* has remained unchanged at R139,00 for incidental costs within South Africa, and R452,00 for meals and incidental costs within South Africa.
*It is important to note that the subsistence allowance is only a guideline provided by SARS and is not legislated.
Update March 2021: A Government Notice in March 2021 reduced the reimbursive travel allowance rate to 382 cents (R3, 82) per kilometre. This change was adopted by SimplePay after this post was written.
The rate per kilometre for reimbursive travel allowances remains unchanged at 398 cents (R3, 98).
- 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|
Section 12J Tax Incentive
The scheme, introduced in 2008 and which allowed taxpayers to invest in start-up companies in lieu of paying income tax, is set to expire on 30 June 2021. You can find more information on the rationale behind the winding up of this incentive on pages 48 and 49 of the budget speech.
We hope that this information has proved useful to you. If you have any questions on how the information provided relates to SimplePay, you can contact us at [email protected].
Equally, if you are not yet a client of SimplePay but would like to be, why not check out our website? Or, better yet, try out our service for free with our 30-day trial, get acquainted with our user-friendly service by reading our getting started page, or take our free online course.
Keep well and stay safe.