Employers must prepare themselves for scheduled changes to PAYE

Approved changes to the PAYE governing medical aid contribution and claims, applicable in the 2012/2013 tax year, has stemmed from a move towards a credit system. This will definitely impact payroll administration and also usher in changes to payroll software.

This was announced at the South African Payroll Association’s annual national conference held in Cape Town and Johannesburg.

Mark Kingon from SARS said in terms of an employees’ medical facility, employers will have to be aware of dependents for the purposes of claiming.

“Specification has been prepared and will be released shortly,” he said. According to Kingon the changes have been made in order to address issues of tax relief and payment between higher income earners and lower income earners.

In accordance with tax legislation changes as set out in the 2011 Budget, delivered by The Minister of Finance, Mr Pravin Gordhan, going forward medical aid relief will take the form of credit. This means that people will receive the same amount of tax relief irrespective of the tax bracket or category they are in.

Teryl Schroenn, CEO at Accsys, a national supplier of management solutions within HR, payroll administration, time & attendance and access control, said the changes will mean that businesses will have to review their existing payroll infrastructure.

“This is to ensure that the payroll process is updated in accordance with the legislative changes,” said Schroenn.

From a payroll software point of view, these developments are indicative of the level at which solutions are designed to empower business.

“Payroll software is really the frontline of any credible operation today and has to keep up with industry developments. The payroll environment is synonymous with change and continuous development – decision makers who are not entirely satisfied with their existing solutions should engage with credible service and support providers to ensure that they move ahead with the times,” she says.

Failure to take heed of inevitable changes and adapt systems accordingly could accrue heavy costs in terms of productivity, labour, additional investment and time Schroenn adds.