SimplePay is excited to let you know that we’ve made some updates to our employee classification feature to cater for a wider range of directors. This newly-improved feature allows you to classify an individual who is a director as an Executive Director / Member of a CC, an RSA Resident Non-Executive Director, or a Non-Resident Non-Executive Director. These classification options will allow you to accurately choose the class that best suits your director classification needs. Choosing the correct classification will enable SimplePay to accurately calculate the director’s PAYE liability, and also ensure the remuneration is correctly reported to SARS.
Below are some of the key differences between these new classification options.
Prior to 1 March 2019, we used the Executive Director / Member of a CC classification to calculate the deemed remuneration, and for reporting the director’s remuneration under a separate SARS code (3615). However, from 1 March 2019, SARS no longer distinguishes between an Executive Director / Member of a CC and a regular employee. An Executive Director / Member of a CC will, therefore, be subject to the same tax treatment as a regular employee. If you select this option, the system will report the director’s remuneration under code 3601.
- Classifying an employee as an RSA Resident Non-Executive Director will ensure that the director’s fees are not subject to PAYE, nor to UIF or SDL contributions. All of the director’s income will be reported under code 3620 or 3670 on their IT3(a).
An RSA Resident Non-Executive Director can choose to voluntarily pay PAYE by having the Voluntary Tax Over-Deduction item added to their payslip. This will result in the PAYE being reported under code 4102 on their IRP5.
- Classifying a Director as a Non-Resident Non-Executive Director will ensure that their fees are subject to PAYE and SDL contributions. However, their fees will not be subject to UIF contributions. The director’s income will be reported under code 3621 on their IRP5.
For assistance in setting up the director’s classification, please refer to our help page here.
If you have any queries about employee classification, please feel free to contact us at [email protected].
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