Minister of Finance, Enoch Godongwana, presented the 2022/2023 Budget Speech on 23 February 2022. This gave small businesses and individuals some relief, but it also provided a much clearer picture of what the year ahead holds financially. We’re shedding some light on a few things that employers need to keep in mind for this tax year from a payroll perspective.
Increase in the National Minimum Wage
It has been recommended by the National Minimum Wage (NMW) Commission that the NMW be increased by consumer price inflation plus one percentage point (6%) from 01 March 2022. This boosts the NMW from R21.69 an hour to around R23.19 an hour. For domestic workers, the commission has recommended that their salaries be increased to 100% of the NMW.
Employers would be wise to update their systems to cater for the new NMW now that it is confirmed, bearing in mind that some sectors have different wage regulating measures. Employees who fall under these regulating measures need to be paid accordingly.
Improvements to Tax Administration
There are plans in the pipeline to relieve employees of the need to file individual tax returns and simplify the annual employer reconciliation (EMP501) submissions for employers.
This is a great time to start educating your employees about PAYE, how it is calculated, which deductions are allowed, which allowances are exempt, and any other important information here. This will better equip them to understand more about their tax affairs, which can be complicated and overwhelming.
The New Pension Proposal
According to the finance minister, draft legislation that allows South Africans to have partial access to their retirement funds will be published in mid-2022. This will involve a member’s retirement savings being split into two pots in the future. It will look like this:
- One accessible pot into which a third of their contributions will be invested
- One inaccessible retirement post when the remaining two thirds will be invested
The aim here is to enable people to access their funds in a financial emergency while at the same time ensuring that they preserve some savings for retirement.
Updated Regulations on Fuel
It was great to see that the general fuel levy and the Road Accident Fund Levy will not be increased, making things a little easier for those who travel for work.
Employment Tax Incentive and Tax-Free Threshold Increases
For those under the age of 69, the annual tax-free threshold has increased from R87 300 to R91 250 as of 1 March 2022. The employment tax incentive will also be expanded by a 50% increase in the maximum monthly value to R1500. The finance minister has encouraged small and medium businesses to take up this incentive.
Need some help with your payroll?
By keeping your business finances up-to-date each month, you’ll tax the pressure off when tax season comes around. Let us help! Contact us today.