What an interesting year 2009 is turning out to be. We started the year with great economic uncertainty and the year seems to have got off to a slowish start and while some sectors are really feeling the economic meltdown, for many others it is business as usual with little or no impact. Hopefully the broom that is sweeping clean in our public sectors will be very effective and we will see real differences in service delivery.
We are in the last stages of submitting this year’s WSP and ATR’s and, despite a few SETA’s who are still releasing formats or experimenting with new IT systems, the submissions are going well. This makes meeting the 30 June deadline challenging. Thank you to all those clients who have managed to give us the information early. For those who still have to submit please note that unless we received your information by the 15th June 2009 we may not be able to input it, check it and have it submitted in time.
Of interest is the developments with regard to the new Council for Trades and Occupations which will be in operation next year and the status of the SETA’s which will be announced at the end of the training year. We note with interest that the new amendment to the Mines Safety Act which was published on the 17th of April 2009 states the following:
Section 10 of the principal act is hereby amended by the addition of the following subsections:
“(4) The employer must keep a record of all formal training provided in respect of each employee in terms of subsection (2)
(5) All mines must submit a workplace skills plan and the annual training reports to the Mining Qualifications Authority”
We welcomed the tax breaks which we received once again in March this year. The tax-free income threshold was increased to R54 200-00 and all other categories were reduced so we should all see more money in our take home pay.
A note from Treasury has asked for comment on other proposed changes to the tax laws which will be presented to Parliament during this month. Below is a copy of the notice published on the 1st June 2009 commenting on the changes proposed.
Learnership tax allowance: The tax incentive to encourage employers to train/up-skill their employees through registered learnerships or apprenticeships will be streamlined and further enhanced. If an employee successfully completes a 12 month learnership, his or her employer will be able to claim an additional deduction of R60 000. This will result in a tax relief for the employer of R16 800 per employee. Where an employee successfully completes a three year apprenticeship, the employer will be able to claim an additional allowance of R180 000 at the end of the third year, resulting in a tax relief of R50 400 per employee. A more generous dispensation applies to employers who train employees with disabilities, with employers qualifying for a 66.67 per cent higher tax relief than for that for employees without disabilities.
Please note that there is a current learnerships tax allowance. It is currently set at a maximum of R50 000-00 per learner (R25 000 on registration and R25 000 on completion of learnership)
Travel (car) allowances: Repeal of the deemed kilometre method: The deemed kilometer method for deducting travel expenses will be repealed with effect from 1 March 2010. The repeal of this method will eliminate an unintended subsidy for commuting by car (a personal expense). Individuals who use their private vehicles for businesses purposes and who receive a travel (car) allowance will still be able to claim such expense by maintaining a logbook of business kilometres travelled. The PAYE system for travel (car) allowances will be adjusted so that 80 per cent of this allowance will be subject to PAYE. The 80 per cent rule will prevent under-withholding from taxpayers once the deemed kilometre method is repealed.
It is advisable that all employees who claim car allowances keep a log book from 1 March 2009.
Retirement withdrawals: The proposed legislation completes the reform process set in motion in 2008 regarding the taxation of retirement and pre-retirement withdrawal lump sums. Most of the proposed legislation dealing with lump sum tables and clarification of anomalies was published in the first batch of draft legislation in February 2009. The proposed legislation also seeks to simplify the taxation of minor beneficiary funds subject to regulation by the Financial Services Board, and to clarify the law when employers legitimately withdraw employer surpluses from retirement funds.
The proposed changes allow for an amount of R22 500-00 tax free for employees who cash in their retirement benefits as opposed to the current R1 800-00.
Provisional tax: In 2008, the provisional tax system was tightened to require 80 per cent accuracy in respect of the second provisional payment when compared to final assessed taxes due. Amid concerns that this requirement may not always be possible (especially for smaller businesses), the 20 per cent penalty will be waived in certain circumstances.
We will keep you posted.
DEVELOPMENTS IN THE DEPARTMENT OF LABOUR
Productivity SA has been incorporated into the Department of Labour and are offering assistance to companies to assist them in improving their Productivity. This is seen as a strategic need by the Government to help the economy grow. The mandate of the Social Plan Programme of Productivity SA is to prevent job losses and/or retain jobs by sustaining companies. Turnaround and Proactive Solutions from the Social Plan will help companies that apply for assistance to establish a Productivity Forum within their Company’s and train them so that Company’s can:
- Sustain existing jobs and increase productivity
- Establish Early Warning Systems and manage problems proactively
- Train Future Forum Members to become Productivity Champions and add value in their companies.
The main benefits to companies that participate are as follows:
- Collaboration between management and workers (Future Forum) will ensure a cordial working relationship for the benefit of all.
- Free 3-day training of Productivity Champions – implement improvement projects to sustain and grow the company.
- Developing a knowledgeable workforce that will know how a company operates and understand the role of employees in maintaining profits and preventing losses
This intervention is provided by Productivity SA at no cost to companies
If training is delivered outside the company premises then the company will be responsible for transportation costs of their employees to the training venue
If training is delivered at the company’s premises then the company will be responsible for the venue and catering requirements if any. Anyone who is interested in pursuing this opportunity should contact Penny at the office.
We will be starting a new Leadership Development Training Courses next month as well as public courses for our Life Skills Training. Anyone who would be interested in attending or having staff attend should contact Debbie at our offices.
The Leadership Development Training course runs for 1 day per month for 10 months and is aimed at line managers. Content of the course includes Performance Management, Strategic Planning, Team Building, Coaching and Industrial Relations. We have been asked to provide training for senior managers and are putting together groups at this level currently.
Life Skills training is aimed at all staff and covers goal setting, career development and financial management. Information on these courses is available on our website at www.connold.co.za
We finally have accredited rating agencies. The Department of Trade and Industry has released the names of accredited rating agencies. The list can be found on their website, but has also been published in our electronic newsletter. All future BBBEE certificates not issues by an accredited rating agency will not be recognised. A government notice was sent out on the 1st of April 2009 and amended on 5 June 2009. It says the following:
- From the 1st of August 2009, only BEE verification certificates issued by Accredited Verifications Agencies or Verification Agencies that are in possession of a valid pre-assessment letter from South African National Accreditation Systems will be valid.
- Despite the provision in paragraph a) above, all verification certificates issued by non-accredited verification agencies prior to 1st August 2009 (June amendment), will remain valid for 12 months from the date of issue
The DTI website and the ABVA website both list accredited and pre-assessment agencies, but if you are not sure, please check the status of the verification agency you wish to work with with either Jane or Penny.
NOTE: Connold and Associates have listed a number of Community Social Investment projects and Enterprise Development projects that we are involved with on our website. If anyone would like to add to this list or contribute to these projects please contact Andrea at our office.
DOMESTIC WORKERS AND UIF
We are constantly finding that many people who employ domestic workers are not registering or paying UIF for them. A domestic worker who works for you one day a week (including the gardener) is not a casual employee. He is a part-time employee and in terms of the UIF Act, you must contribute UIF on his behalf. Should your domestic worker have a claim and find that you have not been contributing then you will need to pay the benefits that the domestic worker would have received had you been contributing.
Remember that the Domestic Worker is entitled to the following benefits:
- Unemployment Insurance if they are dismissed or retrenched
- Ill health benefits if they become too ill to work (they can claim for nearly 8 months
- Maternity Benefits (4 months)
- Adoption Benefits (4 months) if they adopt a child under the age of 2
- Dependents benefits (paid to their dependents in the event of the employees’ death)
Consider: If you pay your domestic worker R140-00 per day, the annual contribution for a person working two days per week will be R291-20 (i.e. annual salary *2%). If she dies her dependents can claim R8 444.80 from UIF. If you have not been paying you will have to pay this amount to her dependents.
UIF registration can be done on-line through their website and levies can be paid annually. The Labour Department will allow us to back pay contributions for three years and this is really worthwhile as your domestic worker will only be entitled to full benefits if you have contributed on their behalf for four years. Remember that it is an insurance and not a fund. If you pay for your domestic worker and they leave, the premium will be transferred to the replacement worker. If you require any assistance please contact Tessa in our office.
Pleia is currently on maternity leave (congratulations on the birth of her daughter Amber). Whilst she is away you can discuss recruitment requirements with Kevin Pearson or Tessa Lourens in our offices.
Our policy on charging for recruitment services, has up to now, been to charge per hour for the work put into filling vacancies for clients with a minimum fee of R7500 plus the cost of advertising. Whilst this has suited many of our clients, there are those who make use of a number of recruitment agencies and thus expect to pay a recruitment fee, based upon a percentage of the annual package. This becomes due upon the appointment of the successful candidate.
In line with this we will now offer our clients this alternative when recruiting for vacancies. The fee for this will be 10% of the package offered to the successful candidate.
We are able to offer a wide range of skills testing (particularly for the various computer packages). These tests are carried out through Thomas International and are easily administered. Please discuss with Kevin, Pleia or Tessa.