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Beware These Four Statutory Deduction Pitfalls On Your Payroll

Pitfalls On Your Payroll

When a business acts as an employer, there are certain statutory requirements that the business will have to adhere to.
Some of these requirements include compulsory registrations with certain governmental departments.

These registrations would include:

  • Registering as an Employer for employees tax (PAYE) purposes with SARS
  • UIF registration with the Department of Labour
  • Registration with the Workmen’s Compensation Commissioner in terms of COIDA

All employees who have a green bar-coded Identity Document – the green ID book – must be registered with the Department of Labour for UIF.

Employees with these green ID books will be able to claim the benefits under the unemployment scheme that is, for: unemployment, maternity, adoption, and long-term illness.

However, non-nationals who are in South Africa legally, with other forms of documentation and/or work permits should not be contributing to the Unemployment Insurance Fund, because they will not be able to benefit from the fund.

Employers nowadays find themselves in a position where their staff complement is made up of both local SA residents as well as foreign nationals. This results in different figures having to be reported to the different authorities such as their monthly payments to SARS, and their reporting figures for Employment Equity and Skills Development, although based on the same set of payroll data for that month.

These numbers will not all correspond and will require qualification and definition, and employers are advised to ensure that their employee records are accurate and up to date.

Examples of the different reports are:

When completing the monthly EMP201 payment to SARS,

• Income tax will be deducted from all employees according to the tax schedules and additionally any consultants who do not meet the independent contractor test,

 UIF will be deducted only from South African nationals, and not from employees who have other forms of documentation to work in South Africa,

• SDL (skills development levy) is calculated at 1% for South African nationals, and 2% for non-nationals (those without green barcoded IDs).

Our understanding is that registration for Workmen’s Compensation in terms of COIDAall employees should be registered.

It can be clearly deduced that your payroll system should make provision for all these different scenarios and allow you to easily report to the different stakeholders.

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