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6 Ways the 2014 Budget will affect your employees

Budget 2014

Finance minister Pravin Gordhan read the 2014 Budget speech last week, which many analysts thought to be a 'conservative' budget in the wake of the financial crisis – together with the new tax-related legislation - that has had us in its clutches for the last number of years. Minister Gordhan has given taxpayers a substantial amount of relief – in the region of R9.25 billion says Madelein van der Watt, development manager at Sage Pastel Payroll & HR – so your employees should be smiling from ear to ear when they receive their payslips at the end of March.

1. Here are the new tax tables for individuals and special trusts for the tax year ending 28 February 2015:

In terms of rebates, Ian Hurst, owner of Paymaster, says that:

  • Primary rebates for all individuals have been set at R12 726,
  • Secondary rebates for people who are 65 and older at the end of February 2015 have been adjusted to R7 110, and
  • Tertiary rebates, for taxpayers 75 and older, are now R2 367.

Legislation manager at Sage VIP, Yolandi Esterhuizen, says that the tax thresholds have been readjusted. For those:

  • Below 65 - These are now R70 700,
  • Between 65 and 74 - These have been set at R110 200, and
  • 75 and older - These have been adjusted to R123 350.

2. Employees are also set to get a bonus in terms of how much they'll be allowed to deduct from their salaries for contributions to:

  • Pension,
  • Provident, and
  • Retirement annuity funds.

The maximum amount they'll be able to deduct annually is R350 000.

3. The bad news that the 2014 Budget speech brought for employees is that as from 2015, they will no longer be able to deduct their contributions to income protection policies from their tax. So this year is their last chance to claim a deduction from these contributions to these policies!

4. If one of your employees travels for work within South Africa and needs to spend at least one night away from home, he's entitled to R335 per day for meals and incidental costs, and R103 per day for incidental costs only.

If your employees use their own vehicles to travel for work purposes, Sars has increased their prescribed rate per kilometre from R3.24 to R3.30. Fixed costs, fuel costs and maintenance costs have also been adjusted:

5. The medical tax credits which you deduct from your employees' salaries for their medical scheme contributions have increased from:

  • R242 to R257 for the main member and his first dependent, and
  • R162 to R172 for each additional beneficiary on the medical aid scheme.

6. From 1 March, if you assist one of your employees to acquire immoveable property, such as a house, no fringe benefit will accrue if:

  • The amount the employee earned in the year before you gave him the immoveable property is R250 000 or less, and
  • The market value of the immoveable property, when it was acquired, is R450 000 or less, and
  • You're not connected to the employee in any way.