There are various changes that affect the tax calculation –

  1. Age

An employee’s age can affect the tax calculation.  Employees that are older than 65 but not older than 75 receive an additional rebate of R 7479.  Employees that are older than 75 receive a second additional tax rebate of R 2493.

Additional tax rebates are effective as of the start of the tax year in which the employee turns 65 or 75 respectively.

  1. Medical Aid

If the company has a medical aid scheme for employees, the payroll administrator must ensure that the employee completes the necessary application forms and submit these forms to the medical aid scheme.

If the employee has added or removed medical aid dependants, his/her contributions to the medical aid scheme will probably change and he/she will have to complete the necessary forms which must be submitted to the medical aid scheme.  This will also affect tax since the different tax credits are applicable based on the number of dependants on the medical aid scheme.

  1. Pension, Provident and Retirement Annuities

If the company has a pension, provident fund or retirement annuities for the employees, the payroll administrator must ensure that the employee completes the applicable forms.  Beneficiaries must also be named in certain cases.  As these are legal documents they must be witnessed and any alterations must be signed.  The required documents must then be submitted to the relevant fund or insurance company.

Pension, provident fund or retirement annuity contributions are unlikely to change except for annual contribution increases, but if, for example, an employee has married, he/she may well wish to alter the beneficiaries named.  If this is the case, the necessary change of beneficiary forms will have to be completed and submitted to the relevant fund or insurance company.

 

  1. Other Changes that Affect the Tax Calculation
  • Moving from one department to another.
  • If the company has different departments, branches or categories that could affect the costing, it is important that this information is entered correctly and kept up to date.  If an employee’s salary cost is split into different cost centres, this information must be updated when necessary.