Tax Rates for 2015 is as follows:

Personal Tax

Income Tax

The amount an individual can earn before they are required to pay tax has been increased for the tax year that runs from 1 March 2015 to 29 February 2016.

Tax rebate increases

Sin Tax

Excise duties on alcoholic beverages will increase between 4.8% and 8.5%. There are some reforms under consideration that will provide excise duty relief to wine-based spirits.

The increases in excise duties are as follows:

Alcohol:

Tobacco

Fuel levy

This will increase fuel prices by 80.5c.

Medical Schemes

The monthly medical scheme contributions tax credits will increase from 1 March 2015. The first two beneficiaries will be increased from R257 to R270 per month and each additional beneficiary will be increased from R172 to R181 per month. Medical tax credits which are related to medical scheme contributions, will be taken into account for both PAYE and provisional tax purposes.

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Employer and PAYE
The liability of an employer to withhold and pay employees tax is illustrated by the following case

The taxpayer in a recently published tax case conducted business as a holiday timeshare exchange company.

Facts
The principal benefit of membership of the taxpayers timeshare scheme was that each year members were entitled to space-bank or deposit their occupation rights with the taxpayer in return for which they were credited with points.

The taxpayer provided its employees who had been in its employment for longer than six months with the opportunity to visit the various resorts by allocating to each employee 17 000 points annually for the purpose of resort education.

The taxpayer maintained that allocation of points to employees enabled them to visit several resorts in any given year, to understand the taxpayers exchange system, and to gain first-hand knowledge and experience of affiliated resorts which assisted them in rendering services. The taxpayer regarded the allocation of points its employees as an integral element in the training and not as a form of payment for services rendered.

Moreover, many employees had not experienced any of the affiliated resorts prior to their employment by the taxpayer and the allocation of points and thereby the granting of an opportunity to gain such experience was considered to be an integral part of its business and good for its business.

The essential features of the scheme included
1.Employees points were valid for one year only;
2.Points not utilised during the year in respect of which they were allocated were forfeited;
3.Employees could utilise their points at the resorts of their own choosing;
4.Employees were not obliged to utilise their points at all;
5.Employees were required, as a condition of the acceptance of points by them, after their visits to complete a resort evaluation form;
6.An employee who failed to complete the resort evaluation form within the stipulated time became liable to pay the exchange fee that would have been payable by members;
7.An employee could not transfer, sell, cede or dispose of his or her points in any way whatsoever; and
8.An employee could not convert points into cash or rent them out privately to a friend or a relative or a family member.

Taxable benefit
SARS regarded the allocation of free points to employees as a benefit to staff and that it was subject to tax in terms of the Seventh Schedule to the Income Tax Act. In terms of the Seventh Schedule a taxable benefit exists when an employee has been provided with residential accommodation either free of charge or for a rental consideration payable by the employee, which is less than the rental value of such accommodation.

The taxpayer did not agree and argued that they did not provide employees with accommodation. Points were allocated to employees and the points so allocated represented the acquisition of a conditional right to exchange those points for an occupation right acquired by the taxpayer from its members.

Decision of the court
The court held that the accommodation was a benefit for which an employee would have had to pay for if he or she has not been given it for nothing and that the right had a money value. It was further held that the award of points was merrily the mechanism by which the taxpayers employee exchange policy was regulated and administered and such allocation of free points was a taxable benefit to employees.

The bad news is that SARS established the current market value of the resorts in issue and based on these figures assessed the taxpayer on an additional total of R10,906,242. Penalties amounting to R1,096,171 were added to the assessment.

The employee and PAYE
The assessment in the above case covered the period of four years. What is the position of the employee concerned that the that PAYE ease not a separate tax, it is only a stipulation in the income tax act and that the employer must withhold tax on the immigration and that it pays to its employees. In other words PAYE is really paid by employees and not by employers.

Employees liability
The Fourth Scheduled to the Income Tax Act provides that any amount of PAYE withheld shall be a debt due to the State and that the employer concerned shall be absolutely liable for the due payment thereof to the Commissioner. That schedule further provides that an employer shall have a right of recovery against the employee in respect of the amount paid by the employer and that such amount be deducted from future remuneration which may become payable by the employer to the employee concerned.

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