Author: admin_kmos

Paragraph 6 (Seventh Schedule) – Right of use of any asset (other than residential accommodation or any motor vehicle)

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6.     RIGHT OF USE OF ANY ASSET (OTHER THAN RESIDENTIAL ACCOMMODATION OR ANY MOTOR VEHICLE)

(1)     Where an employee has been granted the right to use any asset (other than residential accommodation or any motor vehicle) as contemplated in paragraph 2(b), the cash equivalent of the value of the taxable benefit shall be so much of the value of the private or domestic use of such asset (as determined under subparagraph (2) of this paragraph for the period of use) as exceeds any consideration given by the employee for the use of such asset during such period or any amount expended by the employee on the maintenance or repair of such asset.

(2)     The value to be placed on the private or domestic use of such asset shall be –

(a)     where the asset is held by the employer as the lessee under a lease or hiring agreement, the amount of the rental payable by the employer in respect of the period during which the employee has the use of the asset; or

(b)     where the asset is owned by the employer, an amount calculated for the period during which the employee has the use of the asset at the rate of 15 per cent per annum on the lesser of the cost of such asset to the employer or the market value thereof at the date of commencement of the period of use: Provided that where an employee is granted the sole right of the use of the asset for a period extending over the useful life of the asset or over a major portion thereof, the value to be placed on the private or domestic use of the asset shall be the cost thereof to the employer, and in such case the taxable benefit in respect of such use shall be deemed to have accrued to the employee on the date on which he was first granted the right of use of such asset.

(3)     For employees tax purposes an appropriate portion of the said cash equivalent shall be apportioned to each period during the year of assessment in respect of which any cash remuneration is paid or becomes payable by the employer to the employee.

(4)     No value shall be placed under this paragraph on the private or domestic use of an asset by an employee, if –

(a)     such use is incidental to the use of the asset for the purposes of the employer’s business or the asset is provided by the employer as an amenity to be enjoyed by the employee at his place of work or for recreational purposes at that place or a place of recreation provided by the employer for the use of his employees in general: Provided that this item shall not apply in respect of clothing;

[Proviso to subpara (a) added by section 68 of Act 17 of 2017 effective on 1 March 2018]

(b)     the asset consists of any equipment or machine which the employer concerned allows his employees in general to use from time to time for short periods and the value of the private or domestic use of the asset, as determined under subparagraph (2), as does not exceed an amount determined on a basis as set out in a public notice issued by the Commissioner;

[Item (b) amended by section 72 of Act 60 of 2008 and substituted by section 95 of Act 25 of 2015 effective on 8 January 2016]

(bA)  the asset consists of telephone or computer equipment which the employee uses mainly for the purposes of the employer’s business;

[Item (bA) amended by section 41(1) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]

(c)     the asset consists of books, literature, recordings or works of art; or

[Item (c) amended by section 41(1) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]

(d)     such use is granted by an employer to an employee for long service as defined in paragraph 5(4) to the extent that it does not exceed R5 000: Provided that the aggregate value of an amount determined under this paragraph together with amounts determined under paragraph (vii) of the proviso to paragraph (c) of the definition of “gross income” in section 1 and paragraphs 5(2)(b) and 10(2)(e) of the Seventh Schedule does not exceed R5 000.

[Item (d) added by section 41(1) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]

“Employee” definition of Seventh Schedule

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‘employee’, in relation to any employer, means a person who is an employee in relation to such employer for the purposes of the Fourth Schedule, excluding any person who prior to 1 March 1992 by reason of superannuation, ill-health or other infirmity retired from the employ of such employer, but including, in relation to any company, any director of such company and any person who was previously employed by, or was a director of, such company if such person is or was the sole holder of shares in or one of the controlling holders of shares in such company and, for the purposes of paragraphs 2(h) and 13, including any person who has retired as aforesaid and who, after the employee’s retirement, is released by the employee’s employer from an obligation which arose before the employee’s retirement to reimburse the employer for an amount paid by the employer on behalf of the employee or to pay any amount which became owing by the employee to the employer before the employee’s retirement;

“Associated institution” definition of Seventh Schedule

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For the purposes of this Schedule, unless the context otherwise indicates –

 

“associated institution”, in relation to any single employer, means –

 

(a)     where the employer is a company, any other company which is associated with the employer company by reason of the fact that both companies are managed or controlled directly or indirectly by substantially the same persons; or

 

(b)     where the employer is not a company, any company which is managed or controlled directly or indirectly by the employer or by any partnership of which the employer is a member; or

 

(c)     any fund established solely or mainly for providing benefits for employees or former employees of the employer or for employees or former employees of the employer and any company which is in terms of paragraph (a) or (b) an associated institution in relation to the employer, but excluding any fund established by a trade union or industrial council and any fund established for postgraduate research otherwise than out of moneys provided by the employer or by any associated institution in relation to the employer;

Paragraph 28A (Fourth Schedule) – Payments regarded as taxpayer’s liability for tax

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28A.  Payments by way of employees’ tax and provisional tax must, for the purposes of this Act and subject to the provisions of paragraph 28, be regarded as having been made in respect of the taxpayer’s liability for tax whether or not the liability has been ascertained or determined at the date of any payment.

Paragraph 2 (Fourth Schedule) – Employers to deduct tax

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2.    EMPLOYERS TO DEDUCT TAX

(1)    Every-

(a)     employer that is a resident; or

(b)     employer that is not a resident and conducts business through a permanent establishment in the Republic; or

(c)     representative employer,

(whether or not registered as an employer under paragraph 15) who pays or becomes liable to pay any amount by way of remuneration to any employee shall, unless the Commissioner has granted authority to the contrary, deduct or withhold from that amount, or, where that amount constitutes any lump sum contemplated in paragraph 2(1)(b) of the Second Schedule, deduct from the employee’s benefit or minimum individual reserve as contemplated in that paragraph, by way of employees’ tax an amount which shall be determined as provided in paragraph 9, 10 or 11 or section 95 of the Tax Administration Act, whichever is applicable, in respect of the liability for normal tax of that employee, or, if such remuneration is paid or payable to an employee who is married and such remuneration is under the provisions of section 7(2) of this Act deemed to be income of the employee’s spouse, in respect of such liability of that spouse, and shall, subject to the Employment Tax Incentive Act, 2013, pay the amount so deducted or withheld to the Commissioner within seven days after the end of the month during which the amount was deducted or withheld, or in the case of a person who ceases to be an employer before the end of such month, within seven days after the day on which that person ceased to be an employer, or in either case within such further period as the Commissioner may approve.

[Subparagraph (1) amended by section 23(a) of Act 72 of 1963, substituted by section 29(1)(a) of Act 55 of 1966, by section 38 of Act 88 of 1971, by section 45(a) of Act 129 of 1991, by section 54 of Act 59 of 2000, amended by section 65(1) of Act 35 of 2007, by section 18(1)(a) of Act 18 of 2009 and by section 13 of Act 26 of 2013 and substituted by section 6(1)(a) of Act 16 of 2016 and by section 13(a) of Act 18 of 2023]

(1A)  Notwithstanding the provisions of subparagraph (1), a person shall not be required to deduct or withhold employee’s tax in respect of any year of assessment of a company or trust solely by virtue of paragraph (c) of the definition of ‘personal service provider’ where the company or trust has in respect of such year of assessment provided that person with an affidavit or solemn declaration stating that the relevant paragraph does not apply and that person relied on that affidavit or declaration in good faith.

(1B)   Notwithstanding the provisions of subparagraph (1), a person shall deduct or withhold employees’ tax in respect of any amount payable in respect of variable remuneration, as defined in section 7B(1), on the date on which the amount is paid to the employee by the employer as contemplated in section 7B(2).

(2)     Any employer may, at the written request of any employee, deduct or withhold from any amount of remuneration an amount by way of employees’ tax greater than that required to be deducted or withheld in terms of sub–paragraph (1), and shall remit such amount to the Commissioner, and the provisions of this Schedule relating to employees’ tax shall mutatis mutandis apply in respect of such amount.

(2A)   An employer may deduct the amount of the employment tax incentive for which the employer is eligible in terms of the Employment Tax Incentive Act, 2013, from the amount of the employees’ tax to be paid to the Commissioner by that employer in terms of subparagraph (1), unless section 8 of that Act applies.

(2B)  Notwithstanding the provisions of subparagraph (1), a person that pays an annuity and is a pension fund, pension preservation fund, provident fund, provident preservation fund, retirement annuity fund or is licensed as an insurer under the Insurance Act shall, when deducting or withholding employees’ tax in respect of any year of assessment, apply the fixed tax rate that the Commissioner directs must be used in determining the amount of employees’ tax to be withheld, where the person to whom that annuity is paid receives an amount of remuneration from more than one employer.

[Subparagraph (2B) added by section 51(1) of Act 34 of 2019 effective on 1 March, 2022 (effective date in section 51(2) of Act 34 of 2019 as substituted by section 79(1) of Act 23 of 2020) and substituted by section 37(1) of Act 20 of 2021 effective on 1 March, 2022]

(2C)  A pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund that pays a “savings withdrawal benefit” as defined in section 1 shall, when deducting or withholding employees’ tax in respect of that savings withdrawal benefit, apply the rate of tax that the Commissioner directs must be used in determining the amount of employees’ tax to be withheld.

[Subparagraph (2C) added by section 6(1) of Act 12 of 2024 and substituted by section 4(1) of Act 44 of 2024 deemed to have come into operation on 1 September, 2024]

(3)     ……….

(4)     The amount required to be deducted or withheld from any remuneration under this Schedule by way of employees’ tax must be calculated on the balance of the remuneration remaining after deducting therefrom-

(a)     any contribution by the employee concerned to any pension fund or provident fund which the employer is entitled or required to deduct from that remuneration, but limited to the deduction to which the employee is entitled under section 11F having regard to the remuneration and the period in respect of which it is payable;

[Item (a) substituted by section 18 of Act 18 of 2009 and section 8 of Act 39 of 2013 effective on 1 March 2016 (Date of operation in section 8 of Act 39 of 2013 as substituted by section 68 of Act 44 of 2014) and section 66 of Act 17 of 2017 effective on 1 March 2016]

(b)     at the option of the employer, any contribution to a retirement annuity fund by the employee in respect of which proof of payment has been furnished to the employer, but limited to the deduction to which the employee is entitled under section 11F having regard to the remuneration and the period in respect of which it is payable;

[Paragraph (b) substituted by section 8 of Act 39 of 2013 effective on 1 March 2016 – comes into operation in terms of section 8 of Act 39 of 2013 as substituted by section 68 of Act 44 of 2014 and section 66 of Act 17 of 2017 effective on 1 March 2016]

(bA)  any contribution made or amount paid by the employer to any retirement annuity fund on behalf of or for the benefit of the employee, but limited to the deduction to which the employee is entitled under section 11F having regard to the remuneration and the period in respect of which it is payable;

[Item (bA) inserted by section 18 of Act 18 of 2009 and substituted by section 8 of Act 39 of 2013 effective on 1 March 2016 (Date of operation in section 8 of Act 39 of 2013 as substituted by section 68 of Act 44 of 2014), section 66 of Act 17 of 2017 and section 67 of Act 23 of 2018 effective on 1 March 2018]

 

(c)       . . . . . .

[Item (c) amended by section 50(1)(a) of Act 31 of 2005 and deleted by section 8(1)(b) of Act 39 of 2013 effective on 1 March, 2015 and applicable in respect of premiums paid on or after that date]

(cA)     . . . . . .

[Item (cA) inserted by section 94(1)(a) of Act 24 of 2011 repealed by section 92 of Act 21 of 2012) and deleted by section 8(1)(b) of Act 39 of 2013 effective on 1 March, 2015 and applicable in respect of premiums paid on or after that date]

 

(d)     ……….

 

(e)     ……….

 

(f)      so much of any donation made by the employer on behalf of the employee—

(i)      as does not exceed 5 per cent of that remuneration after deducting therefrom the amounts contemplated in items (a), (b) and (bA); and

[Sub-item (i) substituted by section 94(1)(c) of Act 24 of 2011, by section 19(1)(c) of Act 21 of 2012 and by section 6(1)(b) of Act 16 of 2016 deemed effective on 1 March, 2015 and applicable in respect of donations paid on or after that date]

 

(ii)      for which the employer will be issued a receipt as contemplated in section 18A(2)(a);

[Item (f) added by section 67(1)(c) of Act 60 of 2008 and amended by section 3(1)(a) of Act 43 of 2024]

(g)     any amount referred to in section 11(nA) as is actually refunded to the employer granting the deduction under this item: Provided that if the amount so deducted exceeds the remuneration for the month during which the amount is deducted, the excess amount may be deducted in the next succeeding month, if such next succeeding month falls within the same year of assessment as the year in which such amount was actually refunded:

[Item (g) added by section 3(1)(b) of Act 43 of 2024 effective on 1 March, 2025]

: Provided that at any time during the year of assessment the amount of the contribution to be deducted in terms of paragraphs (a), (b) and (bA) must not exceed an amount that bears to the amount stipulated in section 11F(2)(a) the same ratio as the period during which remuneration was paid by an employer to the employee bears to a whole year.

[Proviso to subparagraph (4) added by section 9 of Act 13 of 2017 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]

(5)

(a)     The Commissioner shall on application made to him by any person who is a labour broker or who is an employee by reason of the provisions of paragraph (d) of the definition of “employee” in paragraph 1, issue to such person a certificate of exemption if –

 

(i)      such person carries on an independent trade;

[Sub-item (i) substituted by section 3(1)(c) of Act 43 of 2024]

 

(ii)     in the case of any such labour broker, he is registered as an employer under the provisions of paragraph 15; and

 

(iii)    such person has, subject to any extension granted by the Commissioner, submitted all such returns as are required to be submitted by him under this Act:

 

Provided that the Commissioner shall not issue a certificate of exemption if-

 

(aa)   more than 80 per cent of the gross income of such person during the year of assessment consists of, or is likely to consist of, an amount or amounts received from any one client of such person, or any associated institution as defined in the Seventh Schedule to this Act in relation to such client unless that person is a labour broker who throughout the year of assessment employs three or more full-time employees-

 

(A)    who are on a full-time basis engaged in the business of that labour broker of providing persons to or procuring persons for clients of that labour broker; and

 

(B)    who are not connected persons in relation to that labour broker;

 

(bb)   such labour broker provides to any of its clients the services of any other labour broker; or

 

(cc)   such labour broker is contractually obliged to provide a specified employee of such labour broker to render any service to such client.

 

(b)     The certificate of exemption referred to in item (a) shall be issued in such form as the Commissioner may decide and shall be valid for such period as the Commissioner may indicate thereon.

 

(c)     An employer shall not be required to deduct or withhold employees’ tax from any remuneration paid or payable by the employer to any person who produces to the employer a valid certificate of exemption issued by the Commissioner under item (a).

[Subparagraph (5) added by section 45 of Act 101 of 1990. Item (c) substituted by section 13(b) of Act 18 of 2023]

(6)     Any amount included in gross income in terms of paragraph (eA) of the definition of “gross income” shall for the purposes of this Schedule be deemed to be an amount which an employer pays or becomes liable to pay by way of remuneration to an employee.

“Lump sum benefit” definition of Second Schedule

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“lump sum benefit” includes-

(a)     any amount determined in respect of the commutation of an annuity or portion of an annuity-

(i)      payable by; or

(ii)     provided in consequence of membership or past membership of,

a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund; and

(b)     any fixed or ascertainable amount (other than an annuity) –

(i)      payable by; or

(ii)     provided in consequence of membership or past membership of,

a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund, whether in one amount or in instalments, but does not include any amount deemed to be income accrued to a person in terms of section 7(11);

Section 89bis (ITA) – Payments of employees’ tax and provisional tax and interest on overdue payments on such taxes

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89bis.     Payments of employees’ tax and provisional tax and interest on overdue payments of such taxes

(1)     ……….

(2)     If any amount of employees’ tax is not paid in full within the period of seven days prescribed for payment of such amount by paragraph 2(1) of the Fourth Schedule, or if any amount of provisional tax is not paid in full within the relevant period prescribed for payment of such amount by paragraph 21, 23, 23A or 25(1) of that Schedule, interest shall, unless the Commissioner having regard to the circumstances of the case otherwise directs, be paid by the person liable to pay the amount in question at the prescribed rate (but subject to the provisions of section 89quin) on so much of such amount as remains unpaid in respect of the period (reckoned from the end of the relevant period prescribed as aforesaid for payment of such amount) during which the amount underpaid remains unpaid.

[Subsection (2) amended by section 26(1) of Act 91 of 1982, by section 32(1) of Act 121 of 1984 and by section 21 of Act 65 of 1986 and substituted by section 11 of Act 18 of 2023]

(3)     ……….

89ter.  ……….