As you may be aware, the Income Tax Act, 1962, was amended with effect from 1 March 2019 to clarify that contributions to the various benefit funds operated by various Councils in regards to their Sick Fund, Holiday Pay Fund, Leave Pay Fund and Wellness Funds. are to be treated as taxable benefits. As per the previous circulars issued by the Council, the obligation rests with the respective employers to make PAYE deductions on the contributions. According to the V18BRS Spec from SARS these benefits need to be reported against the code 3833 and 3699.
Due to this, the 2020 Update 1b has incorporated this into the system for MIBFA, Road Freight and the Electrical industry. Please see below the new code per council and how it will affect your payroll:
MIBFA - New Code M203
You will receive an exception to process the code M203.
This code needs to added to the Default and Benefits tabs.
This code will calculate the Fringe Benefit value for Code M103. As this code will only be added in July (or the period that you updated) it will backdate the fringe benefit to take into account the amounts processed since March. So in the first period after the update, this Fringe Benefit will be a inflated to take into consideration the values from March to current.
This transaction is taxable and will affect the PAYE value and will subsequently have an effect on the Nett Pay.
This will reflect on the Tax Total 3833 and 3699.
Electrical - New Code E214
You will receive an exception to process the code E214.
This code needs to added to the Default and Benefits tabs.
This code will calculate the Fringe Benefit value for Code E114 + E214. As this code will only be added in July (or the period that you updated) it will backdate the fringe benefit to take into account the amounts processed since March. So in the first period after the update, this Fringe Benefit will be a inflated to take into consideration the values from March to current.
This transaction is taxable and will affect the PAYE value and will subsequently have an effect on the Nett Pay.
This will reflect on 3833 and 3699
Road Freight - New Code R700
The Road Freight council is different in terms of the the fringe benefit code as it already taxes the employees on the respective funds on code R610, R611, R612, R613. However, as these codes pay back in December, they won't reflect a value on the IRP5.
So we created the code R700 - this code DOESN'T increase the PAYE, DOESN'T print on the Payslip, DOESN'T affect the payslip. This transaction is only used to keep track and report the fringe benefit value on the tax total 3833 and 3699.
Security Council - Not affected
MIBCO
Changes where incorporated in 2020 Update 1a