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Year-end Procedures and New Medical Aid Tax Credits |
Year-end Procedures
1. Generate, calculate and seal payroll transactions as normal.
2. BEFORE printing payslips, prepare the tax periods for Last-Period, and then calculate SITE & PAYE. Ensure there are no over- or under taxations. If there are overs or unders, investigate the cause and make corrections. For instance, if an employee resigned but the tax period was not shortened, it may result in a seemingly over-taxation. Then you would unseal the tax period, shorten it, and calculate SITE and PAYE again.
Mirror Streamline: Main Menu Page 1 >> Tax Periods >> 2012 Tax Year >> Search >> [X] Prepare for Last-Period >> [X] Calc SITE & PAYE & Seal
Mirror Payroll: Main Menu >> Batch Jobs >> Prepare for Last-Period / SITE and PAYE Calculations >> Calculate SITE and PAYE >> Seal Tax Periods
3. Roll over tax periods - to set up new tax periods for the 2012/2013 financial year.
Mirror Streamline: Main Menu Page 1 >> Tax Periods >> 2012 Tax Year >> Search >> Roll Over
Mirror Payroll: Main Menu >> Batch Jobs >> Roll Over Tax Periods
4. e@syFile - The Feb-2012 filing season starts on 2 April 2012. e@syFile Employer version 6.0.1 is now available.
The main steps are:
4.1 Log onto your current version of e@syFile and make a back-up.
4.2 Install the latest version 6: e@syFile 6.0.1 Download
4.3 From Streamline/Payroll, print the EMP501 report and ensure the totals tally with your actual payments to SARS.
4.4 From Streamline/Payroll, generate TEST IRP5 csv file(s) until e@syFile is satisfied with the validation tests. Then generate a LIVE csv file and upload into e@syfile. Note: If you don't have income tax numbers for all employees, you can still upload the LIVE file. Before you proceed with the month-by-month Declaration, utilize the Bundled IT Reg function in e@syFile to obtain income tax numbers.
4.5 Complete the Declaration and Submit before 31-May-2012.
New Tax Tables
Shortly after the budget speech on 22 Feb 2012, we will make available new releases of Mirror Streamline and Mirror Payroll. Once you have completed your Feb 2012 payroll and have rolled over new tax periods, please download and install the latest release - 2012(c5) or later. To load the new tax tables:
Mirror Streamline: Main Menu Page 1 >> Payroll Settings >> Tax Tables >> Load End Feb 2013
Mirror Payroll: Main Menu >> Tax Set. >> Tax Tables >> Load tax year 2013 tables
New Medical Aid Tax Credits
Ensure to change the base packages of employees who contribute to a medical aid BEFORE doing your first payrun in March 2012, and also only AFTER you have already rolled over the tax periods.
You also need to ensure that the software knows the number of beneficiaries on the medical aid.
Mirror Streamline: Select employee >> E2 >> Medical Aid Memberships
Mirror Payroll: Select employee >> Tax Periods >> Medical History
The new legislation provides for four basic scenarios:
Scenario 1 - The employee has retired or qualifies for zero-rated medical benefits due to disability.
For such employees, the base package company contribution is non-taxable, and the deduction is deductible. The system will NOT calculate the Medical Tax Credit (MTC) because such employees receive a benefit via a reduced taxable income.
NB: Before setting up the base package, go:
Mirror Streamline and Mirror Payroll: Select Employee >> Tax Periods >> Edit >> set "Qualifies for Zero-Rated Medical Benefits" to Yes.
Scenario 2 - The employee still works for the employer, and is younger than 65 at the last day of the financial year
For such employees, the base package company contribution is now fully taxable, and the deduction is no longer deductible. The system will however calculate the Medical Tax Credit (MTC) and deduct it from the normal PAYE. The system will ensure that the year-to-date MTC is never more than the year-to-date PAYE or contributions to the medical aid.
Scenario 3 - The employee still works for the employer, and is 65 or older at the last day of the financial year
For such employees, the base package company contribution is now fully taxable, but the full contribution to the medical aid can be set as tax deductible. The system will NOT calculate MTC because such employees' taxable incomes are decreased by the full medical amount.
Scenario 4 - The employee pays the medical aid from his private bank account, and would like to receive the MTC
For such employees, ensure there are no medical aid base package entries because the employee pays the medical aid from his/her own account. To flag this scenario on the system, go:
Mirror Streamline and Mirror Payroll: Select Employee >> Tax Periods >> Edit >> specify in the field "Own Capacity Medical Aid Contribution Per Period" the amount the employee pays to the medical aid per month. (Or divide by 4 if weekly employee).
For more examples of the above scenarios, kindly click here.