Tag Archives: PAYE

Increased UIF Contributions

The Good News in the Budget Speech and amended tax regulations published on Wednesday 24 February 2021 was that our PAYE tax will be marginally less with effect from 1 March 2021 as the tax parameters have been changed a little and the rebates we can claim have been increased slightly.

However, the Bad News is that the contribution to the Unemployment Insurance Fund have at last been adjusted to the benefit level.

In April 2017, the Unemployment Insurance Fund increased the maximum level for benefits to R17 711-58 however, the responsibility for increasing contributions to match this with an increase in the contribution.  This responsibility lay with the Finance Minister and due to changes in Ministry at that time, no regulation in this regard was passed.

With effect from 1 March 2021 this will be corrected.  This means that while everyone still contributes 1% of salary and companies are required to match this, those employees whose earnings are above R14 872-00 will contribute more to UIF.  The maximum contribution level has now been set at R177.12.

What does this mean:

Example 1:  Employee earning R16 000-00 per month.
Tax Rate 2020R1 633.58UIF 2020R148.72Difference in earningsR14 217.70
Tax Rate 2021R1 571.00UIF 2020R160.00Difference in earningsR14 269.00
Tax Rate DifferenceR    62.58UIF Difference-R 11.28 R      51.30
Example 2: Employee earning R25 000-00 per month
Tax Rate 2020R3 880.83UIF 2020R148.72Difference in earningsR20 970.45
Tax Rate 2021R3 749.17UIF 2020R177.12Difference in earningsR21 073.71
Tax Rate DifferenceR   131.66UIF Difference-R 28.40 R     103.26

It seems the Minister gives with one hand and takes away with the other.  The benefit level remains unchanged.