Commencement of the Protection of Personal Information Act

The Protection of Personal Information Act (POPI) is South Africa’s legislation for the protection of individuals’ personal information against unethical use.

Despite being passed into law back in 2013, most of POPI has been waiting in the wings to be commenced. At the end of June 2020, the President announced that  1 July 2020 is the commencement date for the majority of the remaining POPI sections, with the exception of sections 110 and 114(4), which are to commence on 30 June 2021. 

This starts a one year grace period for businesses to ensure they are fully compliant. In this blog we will outline how SimplePay fits into the equation of POPI and our compliance with its requirements.

Overview of Organisations’ Responsibilities under POPI

POPI lists eight key principles with respect to the lawful processing of personal information, most of which can be grouped  into three broader categories. The first category relates to the collection of information, where the purpose for the collection should be clear and the accuracy of information ensured. The second category relates to the processing of information, where it can only be processed for the purpose it was collected, not for an expanded or additional purpose. The third category relates to security, where the information needs to have sufficient security measures to reduce the risk of data breaches.

The final principle that does not fit into the three above categories is accountability. POPI states that the responsible party needs to ensure that the conditions for lawful processing are met. 

Responsible Parties and Operators

The responsible party with respect to POPI is the public or private body or any other person which determines the purpose of and means for the processing of information.

An operator is a person or entity who processes information for a responsible party in terms of a contract or mandate, without coming under the direct authority of that party.

Putting this into context, you, the client are the responsible party for your employees’ (data subjects) personal information. SimplePay is acting as an operator for your benefit, processing your employees’ personal information in order to assist you in your payroll obligations. The relevance of this is that a party’s role determines their rights, obligations and liabilities.

An example of this is shown above, where the responsible party is obliged to ensure the conditions for lawful processing are met when determining the purpose of the processing.

SimplePay’s POPI Compliance

Even before it was required by law, SImplePay was already largely compliant with all our operational regions’ data protection laws, due to our underlying commitment to strict privacy and data handling practices. Since 2018, SimplePay has been fully compliant with GDPR, the EU’s equivalent data protection legislation, with which POPI shares many principles. This has resulted in SimplePay being compliant with POPI even before the official commencement of the Act.  

This means you can have peace of mind that the rights of you and your employees have always been, and will continue to be safeguarded by us. 

For greater detail on SimplePay’s compliance with POPI, you can visit the dedicated page on our website: www.simplepay.co.za/popi.

We hope that this information has proved useful to you. If you have any questions on how the information above relates to SimplePay, please feel free to contact us at [email protected]. Equally, if you are not yet a client of SimplePay but would like to be, or if you’d like to know how we can take the effort out of filing and calculating payroll, get in contact with us or visit our website at simplepay.co.za.

Keep well and stay safe.

Team SimplePay

Interest Rate Change for Employer Loans

In an effort to manage the effects of the COVID-19 lockdown on the economy, the Reserve Bank has announced a further historic cut to the repurchase rate (repo rate). The repo rate will be cut by 50 basis points, from 4.25% to 3.75%, effective 22 May 2020.

The change in repo rate impacts the “official rate” used to calculate the fringe benefit on employer loans. The official rate is set at an interest rate of 100 basis points above the repo rate and any changes in the repo rate will only affect the official rate from the beginning of the next month. The official interest rate for employer loans will therefore change from 5.25% to 4.75% effective 1 June.

As always, you do not need to take any action to implement the new interest rate. We have already updated the system to reflect these changes. All employer loans on payslips dated from 1 June 2020 will make use of the new interest rate. As our system is built to be intuitive, any payslips dated before 1 June 2020 will make use of the previous interest rate.

You can find more information on employer loans on our help page here.

If you have any questions, please do not hesitate to contact our support team.

Team SimplePay

Interest Rate Change for Employer Loans

The South African Reserve Bank has decided to increase the repurchase rate (repo rate) by 25 basis points, effective from 23 November 2018.

The official interest rate used for calculating the fringe benefit on low or interest free loans to employees is set as 100 basis points above the repo rate. This means that the interest rate used for calculating the fringe benefit on employer loans increases from 7.5% to 7.75%, effective 23 November 2018.

If you’re a SimplePay user, you do not need to take any action to implement the new interest rate, as we have already updated our system to reflect these changes. Therefore, all payslips dated and finalised from 23 November onwards will use the new interest rate. If a payslip dated after 23 November was finalised before the 23 November (i.e. it was finalised in advance), you will need to unfinalise the payslip and then finalise it again for the changes to take effect. As we have built our system to be intuitive, the previous interest rate will be used if you are still preparing payslips dated before the 23 November, regardless of what date you physically finalise the payslip.

If you are unsure of how to capture employee loans or calculate the fringe benefit on them, refer to our help page here.

Team SimplePay

ETI Changes for Special Economic Zones

As from  1 August 2018, the criteria for employees who qualify for ETI have been amended for those working in Special Economic Zones (SEZs).

What are Special Economic Zones (SEZs)?

Special Economic Zones (SEZs) within South Africa are geographically designated areas set aside for specifically targeted economic activities to promote national economic growth and export. This is achieved through support measures to attract foreign and domestic investments and technology.  The 6 SEZs are:

  1. Coega
  2. Dube Trade Port
  3. East London
  4. Maluti-A-Phofung
  5. Saldanha Bay
  6. Richards Bay

What changed?

If employers and employers work within a SEZ there is no longer an age limit for employees who qualify for ETI. For the age qualifying test to fall away, the following two requirements must be satisfied:

  1. The employer must have a fixed place of business within one of the 6 designated SEZs, and
  2. The employee must render services to that employer mainly within a SEZ.

If you operate within a SEZ and would like to apply these changes on SimplePay, check out our updated ETI help page here.

Team SimplePay

Travel Allowance Updates Effective March 2018

As of the 2018/2019 tax year, the treatment of travel allowances where employees are reimbursed per kilometre travelled for business has changed. 

Previously, the travel allowance was not taxable on the payslip, irrespective of the amount per kilometre reimbursed. However, the travel allowance may have been taxed on assessment.

From 1 March 2018, if an employee is reimbursed at a rate above the prescribed rate, the portion above the prescribed rate is taxable on the payslip. The prescribed rate for the 2019 tax year is R3.61 per kilometre.

There are no changes to the way that you capture the reimbursement on a payslip on SimplePay. We aim to keep you compliant with SARS and therefore SimplePay has been updated to take these rules into account. The system will automatically split the travel allowance into the taxable and non-taxable portion, based on your inputs.

Please note that due to this change, the reporting codes for reimbursive travel allowances used on the IRP5 have also been updated by SARS.

For more information on this, refer to the following help page.

UIF Exclusion Update for Learners and Employees who Repatriate

With effect from 1 March 2018 and in accordance with the Taxation Laws Amendment Act of 2017, the following employee categories must no longer be excluded from contributing to UIF:

  1. Learners employed in terms of section 18(2) of the Skills Development Act
  2. Employees who intend to repatriate (return to their country of origin) at the end of their working period in South Africa.

 

This means that both (1) Learners and (2) Employees who intend to repatriate, must contribute to the Fund from 1 March 2018.

NB: The aforementioned categories of employees must contribute to the Fund, but will not be entitled to claim a benefit until the Unemployment Insurance Amendment Act changes become effective.

2017 UIF Increase: The Facts

Updated on 7 July 2017 with information about uFiling issues

You might have heard about an increase regarding the Unemployment Insurance Fund (UIF). We would like to provide some clarity on this issue, which seems to have been creating some confusion.

There has, in fact, been an increase. However, this increase has been to the limit that must be used by the UIF to calculate benefit amounts – not contributions. With effect from 1 April 2017, the monthly limit for calculating benefits has been increased from R14,872 to R17,712, as per the Minister of Labour’s notice in the Government Gazette (of 17 March 2017). The corresponding new annual and weekly limits for calculating benefits are R212,539 and R4,087, respectively.

As far as the monthly limit for contributions goes, it has not been changed yet. Therefore, SimplePay must still apply a monthly limit of R14,872 to UIF contributions calculated on the system. As a result, the maximum monthly contributions remain R148.72 for the employee and the employer. This is in line with information received from SARS and opinions expressed by well-known tax experts.

Before any changes can be made to the system, the Minister of Finance has to announce an increase to the limit that must be used when calculating contributions. Currently, there is no indication of when such an announcement will be made, and until such time that an announcement is made, the limits for calculating benefits and contributions will remain out of sync. As soon as an increase to the contribution limit is announced, the system will be updated to ensure that you remain compliant.

Even though SARS and SimplePay are correctly using the existing monthly contribution limit of R14,872, it has come to our attention that uFiling is applying an erroneously updated limit of R17,712. This has already been reported to the UIF Commissioner, and they are busy investigating and working on fixing this issue.

SimplePay users can use our direct submission function, which sends an electronic file to the UIF that bypasses the incorrect calculations being performed by uFiling. More information can be found here.

If you have any questions, you are welcome to email us at [email protected] to assist you.

The SimplePay Team

2016 Retirement Reform

The 1st of March 2016 brought with it a number of significant changes that will affect employees with pension, provident and retirement annuity funds.  This legislation introduces a uniform tax treatment for all three of the above-mentioned funds (total taxable income deduction limited to 27.5% of income, with an annual cap of R350 000).

It also assigns retirement investments to two different categories: Defined Benefit (DB) schemes and Defined Contribution (DC) schemes. This distinction is important as it impacts the value of the fringe benefit arising from employer contributions:

  • Defined Contribution: the full value of the employer contribution
  • Defined Benefit: determined by means of a formula which uses a Category Factor

Employers should therefore contact their fund administrators in order to determine the nature of the fund. As a rule, all Retirement Annuity Funds will fall under the DC category with most Provident Funds doing the same. Pension funds could fall under either DC or DB. We would recommend that all employers with employees contributing to Pension or Provident Funds get in contact with the fund itself to ensure that the calculations are performed correctly. If it is a DB fund, and the fund has not issued a Contribution Certificate, employers should request this as a matter of urgency. This certificate contains pertinent information about the fund, including the Category Factor mentioned above. If applicable, the Category Factor should be entered into SimplePay when adding or updating a Pension or Provident fund item.

Our hard working code wizards have already made sure that SimplePay is fully up-to date with these new changes, and all you will need to do as a Payroll Administrator, is to input the appropriate category factor in the case of Defined Benefit funds.

As always, feel free to get in touch with our super helpful support team if you have any questions or concerns.

2016 Payroll Changes – Additional Medical Tax Credit

With the start of the new financial year looming ahead of us, lawmakers have been hard at work drafting legislative changes that will require Payroll administrators to keep their wits about them if they want to keep up.

To make your life easier, we make it our business to keep abreast of any and all changes that could effect how you process your payroll. In the coming weeks, we will be posting some of the most interesting changes that you should be taking note of, so be sure to check back regularly.

One of the most significant changes taking place in the upcoming financial year, is the introduction of the Additional Medical Tax Credit (AMTC).

This credit serves to give tax relief to employees who are over the age of 65, in the form of an increased Medical Tax Credit for each month.

As of 1st March 2016, employees aged 65 and up will be eligible to receive an additional reduction to the monthly amount of PAYE withheld to the value of 33.3% of the excess total contribution paid to the medical scheme that exceeds three times the regular Medical Tax Credit value. This Additional Medical Tax Credit will be reported separately from the Medical Tax Credit on the tax certificate.

For example:

An employee makes a monthly contribution of R1500 to his medical aid and has no dependents. The Medical Tax Credit in this case would be R270.

To calculate the Additional Medical Tax Credit, we first need to determine difference between 3 x R270 and the contribution. In this case the calculation would be as follows:

R270 x 3 = R810

R1500 – R810 = R690

R690 x 33.3% = R229.77 Additional Medical Tax Credit

This employee would then receive a total tax credit tax credit to the value of:

R270 (Medical Tax Credit)
+ R229.77 (Additional Tax Credit)
= R499.77 (Total Medical Tax Credit)

You’ll be glad to know, that our development team has been hard at work in order to ensure that this feature will be ready to go from the first of of March, with absolutely no additional input required from your side.

As always, if you have any comments or concerns, feel free to get hold of us in the comments or through our super helpful support team 🙂

POPI – We’ve Got You Covered

With rumours circulating of an effective date towards the end of the year, there’s been a lot of fuss lately around the Protection of Personal Information Act, otherwise known as POPI.

The basic idea behind POPI is the regulation of the processing of personal information. Personal information, broadly speaking, refers to any information regarding an identifiable natural or legal person, for example contact details, demographic information and private correspondence. Processing simply means anything done with personal information, including, but not limited to collection, storage, dissemination or destruction.

So what does this mean for you in terms of your payroll data?

As an employer, you will need to ensure that your employees’ personal information is processed in a manner consistent with the spirit and purport of POPI, meaning that it must be

  • processed with the employee’s knowledge and permission;
  • linked to a reasonable purpose – such as complying with tax and labour laws; and
  • carefully managed

At SimplePay, this was the case long before POPI, as the security of your sensitive payroll data has always been one of our greatest priorities. That’s why we have taken all of the steps reasonably possible to ensure that your and your employee’s data is securely stored and only accessed when necessary by those with the required permission to do so. This is done by means of SSL encryption, regular backups to two separate off-site locations and off-site data storage in an access controlled data centre.

For more detail on how we keep your data safe and your business POPI compliant, check out our Privacy Policy and Security Statement.