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THE BUDGET AND HR

Balanced budget speech also emphasises employment and job creation By Sumay Dippenaar inister of Finance Pravin Gordhan delivered a balanced budget speech on Wednesday 23 February 2011 in which individual tax rates remain unchanged but tax brackets have been increased.

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Raising employment levels and job creation The Minister also placed considerable emphasis on raising employment levels and job creation, saying: “We cannot view the fact that 42 percent of young people between the ages of 18 and 19 are unemployed as merely a statistic. Young men and women in cities, informal settlements, towns and villages may not have jobs, but have skills in life.They possess the awareness and the ability to learn, they drive fashion and inspire with their music, yet they know their local traditions. And they have hope, and look to us to give meaning to that hope.” Gordhan added that measures must be taken to ensure that young people can look forward to decent work in productive, competitive enterprises. “It means that we will continue to strengthen social expenditure, enabling families to commit to participating in education and community activities, while supporting the old and sick.” The aim is to put development first and not dependence on welfare and Gordhan said that the Budget was therefore proposing a range of measures to accelerate employment creation.

He also referred to the R9-billion that President Jacob Zuma announced recently as having been set aside over the next three years for a jobs fund to “co-finance innovative public and private sector employment projects.” An amount of R14-billion for further education and training colleges and student financial assistance has also been allocated. Over R20billion has been allocated to Sector Education and Training Authorities (SETAs) and R5-billion to the National Skills Fund, both of which have key responsibilities for training work-seekers. Personal income tax relief and medical aid deductions For individual taxpayers, the good news was personal income tax relief totalling R8.1- billion, a third income tax rebate of R2 000 for individuals older than 75 and an increase in the monthly limits for medical aid deductions from R670 to R720 for principal members and first dependants and from R410 to R440 for each additional dependant. Company car and travel allowance A significant change is the manner in which the value of company cars will be determined. In the new tax year the value will be the cost of the car, excluding finance and interest charges. This means that VAT and any maintenance plan purchased is included in the original cost and company car values will have to be recalculated from 1 March. The fringe benefit value of a company car is calculated at 3.5% if the vehicle was not subject to a maintenance plan at the time it was acquired by the employer and at 3.25% if there was a maintenance plan.The fringe benefit that is calculated must be reduced by any payment made to the employer by the employee other than the cost of licences, insurance, maintenance and fuel, which can no longer be deducted. SARS has now moved to ensure that use of company cars and claiming of travel costs by employees using a company vehicle is more accurately represented by implementing the new requirement. While the car tax benefit used to be taxed at 100%, the onus is now on employers to apply either an 80% or a 20% tax rate when including the new fringe benefit value of a company car into an employee’s remuneration for the calculation of PAYE in the payroll. This means that the responsibility rests with the employer to indicate what percentage of the mileage the car will travel will be for business purposes. If 80% of the total kilometres travelled are for business purposes, then the employer is permitted to subject only 20% of the allowance to the employee’s tax. Only one taxable percentage may be used during the assessment year. Any change means that the fringe benefit amounts for previous periods must be re-calculated. To assist SME businesses with the changes outlined in the new Budget, Softline Pastel Payroll will incorporate all of the changes to tax bracket values, travel allowances, tax relief rebates and medical aid. To find out how the budget speech affects your pocket, visit www.pastelpayroll.co.za and enter your current monthly salary and allowances in the online Pastel Payroll salary tax calculator. Sumay Dippenaar, Softline Pastel Payroll, +27 11 304-4190, Sumay.Dippenaar@pastelpayroll.co.za, www.pastelpayroll.co.za

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People Dynamics April 2011

PD 4 2011 April  
PD 4 2011 April  

Dynamics Labour relations and labour law Journal of the South African Institute of People Management www.ipm.co.za April 2011 • Vol 29 No. 4...

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