Calculations

Remuneration is calculated as follows:

Taxable earnings
+ Taxable fringe benefits (perks)
= Remuneration
- Tax deductions
= Balance of remuneration
Taxable income is calculated as follows:
Gross income
- Exempt income
= Income
- Allowable deductions
= Taxable income
Calculation: Fringe benefits = Value of the asset - amount paid by the employee
Overtime
Option 1
The employer pays the employee at 1.5 times his normal hourly rate for every overtime
Hour worked.
Option 2
The employer grants the employee 1.5 hours paid time off for every overtime hour worked.
Option 3
The employer pays the employee at the normal hourly rate (times 1) and in addition grants the
employee 0.5 hours paid time off for every overtime hour worked.
UIF remuneration is defined as the total of:
Taxable earnings (excluding commission, lump sums, restraint of trade, etc,)
+ Fringe benefits
= UIF remuneration
SDL remuneration is defined as the net total of:
Taxable earnings
+ Fringe benefits
- Tax deductions
= SDL remuneration (Balance of remuneration
Persons excluded as employees
The following persons are excluded as employees and will not to be included in any OID
calculations:
a person undergoing military service or training;
a member of the Permanent Force while defending the Republic;
a member of the Police Force while defending the Republic;
a person who contracts for the carrying out of work and himself contracts other persons to
perform such work;
legal entities;
common law independent contractors; and
a domestic employee in a private household.
Wage vs remuneration
Wage as defined by the BCEA, is used for the calculation of:
the base rate per hour to be used for overtime payments;
the payment for public holidays worked;
the payment for Sundays worked;
the payment for sick leave; and
the payment for family responsibility leave.
Remuneration as defined by the BCEA, is used to calculate payments for:
annual leave taken (paid while still employed); and
termination payments:
o annual leave (paid on termination),
o notice pay, and
o severance pay
Sick leave
The sick leave cycle is a period of 36 months commencing on the date of engagement of the
employee, or immediately following the completion of that employee’s prior leave cycle.
An employer must pay an employee for a day’s sick leave:
the wage the employee would ordinarily have received for work on that day; and
Fringe benefits
Fringe benefits are benefits that an employee may receive that is not cash. These items are
taxable. The
Income Tax Act specifies in the Seventh Schedule how to calculate the value of the benefit that
accrues to
the employee for tax purposes.
Fringe benefits include the following:
right of use of a motor vehicle;
right of use of an asset;
acquisition of an asset at less than the actual value;
free or cheap residential accommodation;
free or cheap holiday accommodation;
low or interest-free loans/debt;
free or cheap services provided by the employer;
benefits in respect of insurance policies;
employer contributions towards retirement funds;
employer contributions towards medical aid;
bursaries/scholarships and
payment of debt or release from debt. on the employee’s usual pay day
Taxable earnings
A taxable earning is an earning that an employee receives that the employee must be taxed on.
Taxable earnings include, but are not limited to, the following:
salary;
commission;
taxable portion of a travel allowance;
overtime; and
bonuses.
Creating a company
1. Click File…New
2. In the New Company Name field, enter the company’s folder name as PRO24.
3. Click Ok
4. Click Next.
5. Enter the company name.
6. Click Next.
7. In the Sequence field, select the DD/MM/YYYY date format option.
8. In the Employee Codes section, select the Automatic Coding option.
9. In the Next Code field, add the first code as 0001.
10. Click Next.
11. Do not select any of the Nett Pay Rounding, Compulsory Deductions, or Industrial Council
fields.
12. Click Next.
13. From the Tax Year drop down menu, select the 2023 – 2024 option.
14. Check the Monthly check box
15. Select the End date of the first pay period in the tax year as 31/03/2023.
16. Check the Weekly check box.
17. Select the End date of the first pay period in the tax year as 03/03/2023.
18. Check the Fortnightly check box.
19. Select the End date of the first pay period in the tax year as 10/03/2023.
20. Select the Period number of the first processing period as 1 for all pay frequencies
21. Click Next
22. Click Finish
Company setup

. Click Setup…Company Parameters.

2. Select the Company…Company Information tab.
3. Enter the information provided.
5. Select the Company…Addresses tab.
6. Enter the following information: 8. Select the Statutory tab.
8. Select the Statutory tab
9. Enter the following statutory information
11. Select the Tax Contact Information tab.
12. Enter the following information:
Setting up employee
1. Select Edit…Employee Profiles.
2. Select the New icon
Setting up the OID transaction
1. Click Setup…Transactions.
2. Select the Zoom icon.
3. Locate transaction code 9100 – OID Contribution and double click to select it.
4. In the Percentage field, enter 0.36.
5. Click the Copy to Weekly and Copy to Fortnightly button.

Medical Aid
1. Select Process…Payslips.
2. Locate Samantha’s payslip.
3. On the Default tab, in the next available line, add code 8090 – Med. Aid – Employee Amount.
4. In the Amount field, enter 1000.
5. Select Yes to update the current period’s payslip.
6. In the next available line, add transaction code 9090 – Med. Aid – Employer Amount
7. In the Amount field, enter 1000. This will prompt the transaction code 6172 – Medical Aid
Fringe Benefit, to automatically calculate the same value captured for transaction code 9090.
Payroll Run
1. Select Process…Payroll Run
2. Select Next
3. Select to Perform the final calculation without printing payslips.
4. Select the Filter button.
5. Select OK.
6. Select Next
7. Select Process
8. Select Finish
Printing a payslip
9. Select Process…Payroll Run.
10. Select Next.
Sage Pastel Payroll & HR Processing204
11. Select to Print payslips only (final calculation performed previously).
12. Select the Filter button.
13. In the Filter column, highlight the Weekly option.
14. Highlight the Employees option under Weekly.
15. Highlight the Code option under Employees.
16. Select OK.
17. Select Next.
18. Select Process.
19. To print the payslip to PDF, select Set Printer then select Microsoft Print to PDF
20. Select Ok
Fringe benefits
1. Select View…Parameters…Tax Totals
2. From the Print To drop down menu, ensure the Screen option is selected.
3. From the From Tax Total drop-down menu, select the 3801 Acquisition of Assets option.
4. From the To Tax Total drop-down menu, select the 3828 RA Fringe Benefit option.
5. Tick the Transaction Details check box
6. Click Ok
Deductions

Pension fund / Provident fund

Transaction Code Description Template type

7000 Pension – Employee Amount Tax-deductible deduction (employee contribution)

9000 Pension – Employer Amount Company Contribution

7001 Pension – Fixed Amount Tax-deductible deduction (employee contribution)

9001 Pension – Fixed Amount Company Contribution

7002 Pension – Fixed % Tax-deductible deduction (employee contribution)

9002 Pension – Fixed % Company Contribution

7003 Pension – Actual % Tax-deductible deduction (employee contribution)

9003 Pension – Actual % Company Contribution

6410 Pension Fund Fringe Benefit Benefit

7040 Provident – Employee Amount Tax-deductible deduction (employee contribution)

9004 Provident – Employer Amount Company Contribution

7041 Provident – Fixed Amount Tax-deductible deduction (employee contribution)

9005 Provident – Fixed Amount Company Contribution

7042 Provident – Fixed % Tax-deductible deduction (employee contribution)

Retirement
9006 Provident annuity
– Fixed % Company Contribution

Transaction
7043 Provident
code–Description
Actual % Tax-deductible
Template typededuction (employee contribution)

7100
9007Retirement
Provident –Annuity
Actual %
Tax-deductible
Company Contribution
deduction

(employee contribution)
6411 Provident – Fringe Benefit Fringe Benefit

9400 Retirement Annuity - Company Company Contribution

6400 Retirement Annuity Benefit Fringe Benefit

1. Select Setup…Retirement Funding…RFI Profiles
2. In the Fund Code field, enter 1000.
3. In the Fund Description field, enter Autumn Leaves Pension Fund.
4. In the RFI Type section, select the Percentage of Income option.
5. Enter the following transactions with their percentages:
7. Select the Employees tab.
8. Select the Employee Filter button.
9. Ensure all employees appear on the right side under the Employees To Process block
10. Click OK.
11. All the employees will appear
12. Save the changes and click Close
Normal earnings/income
Normal salaries and wages, and backdated salaries and wages that relate to the current year of
assessment, are reported against the normal income IRP5 code 3601.
Commission must be reported against IRP5 code 3606.
Overtime must be reported against IRP5 code 3607.
These earnings are fully taxable.
Allowances
An allowance is an amount of money granted by an employer to an employee where the
employer is certain that the employee will incur business-related expenditure on behalf of the
employer, but where the employee is not obliged to prove or account for the business-related
expenditure to the employer
Travel allowance
A travel allowance is any allowance paid or advance given to an employee in respect of
travelling expenses for business purposes in a private motor vehicle.
The travel allowance is 80% taxable, unless the employer is satisfied that the vehicle will be
used for business purposes at least 80% of the time, then the 20% of the allowance is taxable.
This means that the employer has the option, per employee, to include 20% or 80% of the
travel allowance as remuneration for tax purposes.
Reimbursive travel allowances on the payroll
100% of the portion of the reimbursive travel allowance that exceeds the prescribed rate per
kilometre will be included in remuneration. The prescribed rate for the 2023/2024 tax year is
R4.64. The reimbursive travel allowance must be reflected against the correct IRP5 code on the
tax certificate.

Variable remuneration
Generally, remuneration is taxable when it is received or accrued, whichever event occurs first.
However, in the case of variable remuneration, PAYE must be withheld on the date which the
amount is paid to the employee. Variable remuneration is defined as: overtime, bonuses,
commission, an allowance or advance paid in respect of transport, expenses such as a travel
allowance, leave paid out, reimbursive travel allowance, any night shift allowance, any
standby allowance, certain business reimbursements, and any amount that is determined
based on the employee’s work performance (from March 2023).

Interim reconciliation, annual reconciliation

and tax certificates
EMP501: Interim Employer Reconciliation Declaration
The interim EMP501 Reconciliation Declarations must be submitted to SARS reconciling PAYE,
SDL, UIF and ETI information (if applicable) from March to August. It is usually due by the end of
October. Reconciliation declarations can be completed using e@syFile Employer software or
eFiling for 50 IRP5/IT3(a)s or less. It is submitted online via SARS eFiling or via a SARS branch.
EMP501: Annual Employer Reconciliation Declaration and tax certificates At the end of the tax
year, employers must prepare and submit their annual EMP501 Reconciliation Declarations and
employees’ tax certificate information to SARS reconciling PAYE, SDL, UIF and ETI information (if
applicable) from March to February. This is usually due by the last working day of May.
Employers must issue employees with their tax certificates once the EMP501 reconciliation is
completed and copies of both the return and the tax certificates have been submitted to SARS.
The e@syFile
Employer software is used to complete reconciliations and tax certificates to SARS. For 50
IRP5/IT3(a)s or less, eFiling can also be used. The submission is done online via SARS eFiling or
via a SARS branch. An IRP5 tax certificate must be issued for those employees from whom
employees’ tax was deducted during the tax year, and an IT3(a) certificate must be issued if, for
a valid reason, no employees’ tax was deducted during the tax year.
Deadlines
Certain employee data is required for the submission of reports and/or payments. The
deadlines for these reports and/or payments must always be maintained. Therefore, the
recording of employee data should be completed with enough time remaining for these
deadlines to be met.
Statutory deadlines
EMP201: Monthly Employer Declaration
The EMP201 return contains the payment details for PAYE (Pay As You Earn),
UIF(Unemployment Insurance Fund), SDL (Skills Development Levy) and ETI (Employment Tax
Incentive), if applicable, for the month. It needs to be completed and submitted, along with
payment, to the South African Revenue Service (SARS) by the 7th day of each month. Where
the 7th day falls on a Saturday, Sunday or public holiday, the return must be submitted, and
payment must be made on the last business day prior to that. This form and payment can only
be submitted once the payroll is complete and up to date.
UIF Declaration
The UIF (Unemployment Insurance Fund) Declaration contains employee data required for the
updating of the UIF database. This submission must be made to the UIF Commissioner by the
7th of each month.
Therefore, all employee data required for this declaration must be complete before the
deadline can be met.
EMP501: Interim Employer Reconciliation Declaration
Interim EMP501 Reconciliation Declarations must be submitted to SARS, usually by the end of
October, reconciling PAYE, SDL, UIF, and ETI (if applicable) from March until August.
EMP501: Annual Employer Reconciliation Declaration and tax certificates
At the end of each tax year, employers must submit their annual EMP501 Reconciliation
Declarations and employees’ tax certificate information to SARS. This is the reconciliation of
PAYE, SDL, UIF and ETI (if applicable) from March until February and is normally due by the end
of May. Once this information has been submitted to SARS, employers must issue employees
with their tax certificates.
IRP5 Code Description

3703

Report the full reimbursive travel allowance on the tax certificate against code 3703 if:

the rate of reimbursement does not exceed the prescribed rate per kilometre, and

the employee does not receive any form of compensation for travel. .

3702

Report the full reimbursive travel allowance on the tax certificate against code 3702 if:

the rate of reimbursement does not exceed the prescribed rate per kilometre, or

the employee does receive any other form of compensation for travel.

3722

Report the reimbursive travel allowance on the tax certificate against code 3702 and 3722

if: the rate of reimbursement does exceed the prescribed rate per kilometre (whether the

employee receives any other form of compensation for travel, or not).

Earnings Earnings represent the cash portion of an employee’s remuneration.

Salary, overtime, commission,

bonuses, allowances, etc.

Gross remuneration Gross remuneration is the total earnings

(salary/package plus all other taxable and

non-taxable earnings) before any deductions

are deducted.

Deductions Deductions are the items that are deducted from the earnings before the net pay is

determined. This will include statutory deductions, such as tax (PAYE) and UIF, but also includes
non-statutory deductions, such as loans and medical aid. Tax (PAYE), UIF, loans, pension fund,
provident fund, medical aid, etc. Net pay The net pay is the sum of the earnings minus the
deductions and is the amount of money the employee is paid.

Net pay

Company (employer) contributions Company contributions are contributions that the employer
makes on behalf of the employees. Company (employer) contributions towards UIF, SDL, pension
fund, provident fund, medical aid, etc.

Fringe benefits Fringe benefits are benefits given to employees in a form other than cash. These

items are taxable. The use of a company car, employer contributions towards medical aid, employer
contributions towards retirement funds, free or cheap accommodation, low or interest-free

loans/debt, etc
Taxable income Rates of tax (R)

R1 – R237 100 18% of taxable income

R237 101 – R370 500 R42 678 + 26% of taxable income above R237 100

R370 501 – R512 800 R77 362 + 31% of taxable income above R370 500

R512 801 – R673 000 R121 475 + 36% of taxable income above R512 800

R673 001 – R857 900 R179 147 + 39% of taxable income above R673 000

R857 901 - R1 817 000 R251 258 + 41% of taxable income above R857 900

R1 817 001 and above R644 489 + 45% of taxable income aboveR1 817 000

Tax rebates for individuals

Primary rebate R17 235

Secondary rebate (for persons 65 years and older) R9 444

Tertiary rebate (for persons 75 years and older) R3 145

Tax thresholds for individuals

Persons under 65 years R95 750

Persons 65 - 74 years R148 217

Persons 75 years and older R165 689

Medical scheme fees tax credit for individuals

For the main member R364

For the first dependant R364

For each additional dependant R246

Additional medical expense tax credit (for persons 65 years and older)

33.3% of the total medical aid contributions which exceeds three times the medical scheme fees tax

credit.