The Minister of Labour announced in Government Gazette No. 42092 that there would be an increase in the OID earnings threshold under Section 83 (8) of the Compensation for Occupational Injuries and Diseases Act, 1993 (Act no. 130 of 1993).
As from 1 March 2019, the maximum amount on which an assessment of an employer shall be calculated on will be R458 520.
This change has been made effective in your OID report on SimplePay. To access this report, go to Filing > OID (Workman’s Comp) Return.
When downloading the report for the tax year ending 28-02-2019, the threshold of R430 944 for 2018/2019 will be displayed as the 2019 tax year cap, while the new threshold of R458 520 will be displayed under the 2020 tax year cap.
When downloading the report for the tax year ending 28-02-2020, both caps will be displayed as R458 520, as the cap for 2020/2021 has not yet been announced.
In February, the Finance Minister announced a proposed reform that would see the UIF earnings cap reduced to R1000. This essentially means that no matter how much anyone earns, UIF deductions would only be calculated from a maximum amount of R1000.
In other words only 1% of R1000 would be deducted from an individual’s salary – R10! Added to that, should anyone earn below R1000 then only 1% of that pay would be reserved. Whereas currently for a person earning R5000, the UIF deducted would be R50. It is clear to see that this proposed plan would be favourable to every employee and employer. Employers are also required to put up an equivalent UIF amount for each worker, thereby making the overall contribution 2%.
The minister faced opposition and a result this reform has now been postponed to provide time for further public consultation.
A new effective date has not been specified but it is unlikely to be any sooner than a year’s time.
As always, please contact us if you have any questions.