At That Point
  • home
  • services
  • about us
  • our thoughts
  • videos

Proposal for a regulatory framework for payroll deductions

15/10/2018

0 Comments

 
After becoming aware of an increase in payroll deductions in the past years, the South African Reserve Bank (SARB) and National Treasury have engaged in discussions with stakeholders on the creation of a regulatory framework to govern payroll deductions.  The proposal was open for public comment until 30 April 2018.
 
The SARB and National Treasury want to implement a stable and effective payroll deduction regulatory framework that aims to benefit employees by protecting them from unfair lending practices, affords them the opportunity to access financing at reasonable rates, promotes savings and productive credit and minimises the risk of conflicts of interest.  The regulatory framework further aims to be transparent, safe and efficient to sufficiently protect employees.
 
The Options
The SARB and National Treasury have proposed three options which will form the base of the proposed regulatory framework for payroll deductions.
 
Option 1:
Employers will have no access to voluntary payroll deductions.  Only statutory, court order, collective agreement and arbitration award deductions will be allowed.
 
“This is the least complicated option and the playing field will be levelled as no preferential treatment can be given to certain creditors or institutions,” says Craig Rocher from Tax Consulting South Africa.  Employees will also be protected against unauthorised deductions.
 
This option may however affect employee benefit programs where employers are providing employees with financial assistance and employees may lose the cost-effective advantage of paying through payroll.
 
Option 2:
Employers will have limited access to voluntary deductions, meaning that only a set of approved voluntary deductions will be permitted.
 
According to Rocher “this option allows for deductions that are beneficial to employees, such as their mortgage payments, savings and retirement annuities.”
This will however require adjustments to payroll systems and certain financial institutions may feel disadvantaged when their deductions are not allowed.
 
Option 3:
Employers will have unrestricted access to voluntary payroll deductions, meaning an unregulated payroll deduction system.
 
Under this option all parties will have equal right to deduct from an employee’s salary and there will also be improvements in employees honouring their financial obligations.  Employees will have a choice in who gets paid from payroll and who doesn’t.
 
“Collection preferences may occur under this option as the employer will then need to decide the hierarchy of payments” according to Rocher.  Employees may also be exposed to unfavourable contractual terms and it may be difficult for them to stop or dispute payroll deductions.
 
How will it affect employees?
Employees will be affected no matter which of the options is chosen in the end.  “They may be subject to additional bank charges should voluntary deductions no longer be allowed, and it should be considered that many employees don’t have access to internet banking to make their monthly payments, there for creating a lot of additional administration for them” says Rocher.
 
The benefits should however not be disregarded, as many employees are subject to unfair lending terms and unreasonable interest rates, leaving them with almost no nett pay to take home. 
 
The way forward
The SARB and National Treasury will be taking the public comments received in April under consideration and the preferred regulatory option will be communicated to stakeholders.
 
ENDS
 
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za
 
For more information on Tax Consulting please visit:
Website:  http://www.taxconsulting.co.za/
LinkedIn: Tax Consulting South Africa
Facebook: Tax Consulting South Africa
0 Comments
    Welcome to the Tax Consulting newsroom.

    Archives

    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    August 2017
    July 2017

    Categories

    All
    2017/2018 Tax Filing Season
    2017 Critical Skills Survey
    2017 White Paper On International Migration
    2018 Critical Skills Survey
    Agreement
    Auditing
    Audits
    Bank Account
    Ben Makhalemele
    Best Practice
    Binding Private Ruling 285
    Bitcoin
    Christopher Renwick
    Claudia Aires
    Common Reporting Standard
    Common Reporting Standards
    Contractual Principles
    Corruption
    Court Decision
    Craig Rocher
    Critical Skills
    Crookes Brothers Ltd
    Crypto Miners
    Cyril Rhamaphosa
    Darren Britz
    Deceased Estates
    Department Of Higher Education And Training
    Department Of Higher Education And Training (DHET)
    Department Of Home Affairs
    DHA
    Dispute Frustrations
    Dispute Resolutions
    Double Taxation Agreement
    Economic Activity
    Edward Kieswetter
    E-filing
    Employee
    Employer
    Employment
    Engineers
    Expatriate
    Expatriates
    Expatriates In South Africa
    Expats
    Financial Emigration
    Financial Speciallists
    Foreign Skilled Employee
    Formalising Emigration
    Franchisees
    Franchises
    Government
    Guptas
    High Court Of South Africa
    Immigrant
    Immigrant Employment
    Immigration
    Immigration Act
    Income Reporting
    Income Tax Assesments
    Information And Communication Technology
    Inheritance Planning
    IRP5
    Jacob Zuma
    Jean Du Toit
    Jonty Leon
    Mariana Stander
    Marisa Jacobs
    Mark Kingon
    Medical Aid
    Motion Court
    Natasha Wilkinson
    National List Of Occupations In High Demand
    National Treasury
    Nicolas Botha
    No 19 Of 2002
    Nokia Siemens Networks
    Nugent Commission
    Passports
    PAYE
    Pay Raise
    Payroll
    Payroll Audits
    Payroll Deductions
    Permanent Residency
    Permanent Residency In South Africa\
    Personal Finances
    Regulatory Framework For Payroll Deductions
    Remunieration
    Retirement Annuity
    Retrenchment
    Retrenchment Packages
    Reunert Ltd
    Salary Raise
    SARB
    SARS
    SARS Acting Commissioner
    SARS Ruling
    Section 24C Of The Income Tax Act
    Skills Gap
    Skills Shortage
    South African Expats
    South African Income Tax Act
    South African Reserve Bank
    State Capture
    Stimulating Investment
    Tanya Tosen
    Tasia Brummer
    Tax
    Tax Administration Act
    Taxation Laws Amendment Bill Of 2007
    Tax Compliance
    Tax Consulting
    Tax Consulting SA
    Tax Court
    Tax Deadline
    Tax Debt
    Taxes
    Tax Filing Season 2018
    Tax Law
    Tax Ombud
    Taxpayers
    Tax Returns
    Tax Specialist
    Thamsanqa Msiza
    The Commissioner
    The Nugent Commission
    The South African Revenue Service
    Transfer Pricing
    Transfer Pricing Policies
    Value-added Tax
    VAT
    VAT Refunds
    Voluntary Disclosure Programme
    White Paper For International Migration In South Africa
    White Paper For South African Migration
    Work Permits
    Work Visa
    Xpatweb

    RSS Feed

CONTACT US

office [at] atthatpoint [dot] co [dot] za
© COPYRIGHT 2019
ALL RIGHTS RESERVED.

  • home
  • services
  • about us
  • our thoughts
  • videos