The following query was received from a reader of LexisNexis–

"A subject that we find to be problematic is who to contact at SARS when our VAT claims are 'grabbed' by SARS without any prior notification or warning! The attitude is opposite the image SARS are trying to portray that if we all pay our taxes South Africa will be a wonderful country - the attitude is 'we can do whatever we like'.

On one occasion in the past 6 months our VAT claim was allocated to provisional tax despite having paid this in full prior to submitting the claim. In the second instance our March return was only paid out in the middle of June 2010 - again without any reasons for the delay being given. If you phone the telephone number on the VAT return querying the non-payment you are given stories that the claim has been approved etc and given a reference number. 3 weeks later you have to go through the same performance again. We would like to know where the 'buck' stops.

I am sure other subscribers have similar problems in dealing with the 'nameless' people in SARS and that people in authority should be aware of the problems."

[Gavin L Black e mail gavin.gmb@gmail.com e mail gmb@pop.ibi.co.za tele (002711)011 3978482 cell phone (002782) 082 8537955 GMB International Trading c.c.]

Ron Warren's response:

This is a common complaint, as there has been no system in force at SARS for a taxpayer to ensure that a particular payment was allocated to a specified debt or tax. To get over this problem, with effect from 1 April 2010 SARS introduced a new form of EMP 201, the form used by employers to pay to SARS the PAYE, Skills Development Levy and UIF contributions each month. When the form is requested and paid using eFiling, the computer generates a unique payment reference number. If payment is made to a bank, the bank automatically generates a unique payment reference number.

SARS in turn allocates the payments made on this form to the exact liability (PAYE, SDL and UIF) entered on the form. This is done electronically, and no human at SARS is allowed to make one of their notorious journal entries transferring the amount to some obscure debt of which the taxpayer has no knowledge.

The taxpayer (employer) can redirect all or a portion of the amount paid to some other period's PAYE/SDL/UIF by submitting another EMP 201 with the same payment reference number, specifying the amount to be transferred and how it is to be allocated between PAYE/SDL/UIF for a specified period (which can be different from the period on the original EMP 201). Thus, the employer now has complete and unfettered control over payments made in respect of PAYE, SDL and UIF.

I understand that SARS intends making similar functionality available for all other types of payment made by a taxpayer, including VAT. When this happens, a taxpayer will have complete control over all payments made to SARS, and human intervention will be eliminated completely. SARS will also furnish the taxpayer with detailed statements of account, showing all liabilities and all payments made.

I have no idea when this will happen, but as soon as I do I will make it known in this newsletter. I expect it to happen in the near future.

Ron Warren (CASA) is an acknowledged expert inemployees' tax and other legislation affecting payrolls. With extensive experience in the legal and practical requirements of payrolls, Ron is also the designer of several highly successful computerized payroll systems including the nuQ payroll system. A founding member of the Payroll Authors Group (PAG), which was formed at the behest of the then SARS Director of Law, Ron has represented the PAG at SARS meetings for more than 15 years, liaising on tax matters of practical importance to the payroll industry. Ron explains the practical application of legislation changes, and not just the content of the changes. He is also the author of Payroll Administrator's Manual and Payroll World.

I am not quite sure what you mean by “bring his car allowance to zero”.  Your question only makes sense where the employee is paid on a cost to company basis, with a total package which he can adjust from time to time (usually only annually).  If the employee is paid on a total package basis, then he would be well advised to cancel his car allowance as a package component (which is what I think you mean) if he does not in fact use his private car for business purposes.  It is of course possible that SARS might query this in the event of a PAYE audit on the employer, but any penalty for such action would be levied against the employer, not the employee.  The employer is responsible for deducting the correct PAYE, and if the car allowance is a disguised salary and not for private travel, then SARS is entitled to penalise the employer for the PAYE not deducted on 60% (or 80% from March 2010) of the travel allowance, plus penalties of up to 200% and interest.

You are entitled to pay your employee’s relocation costs free of tax, as follows –
• The cost of transporting the employee, members of his household and personal goods and possessions from his previous place of residence to his new place of residence.
• Such costs as the Commissioner may allow which have been incurred by the employee in the sale of his previous residence and settling into permanent residential accommodation at his new place of residence.
• The cost of hiring temporary residential accommodation in a hotel or elsewhere for the employee and members of his household for a maximum of 183 days after the transfer took place or after the date of his appointment.

It is immaterial whether the employer pays for these expenses directly or reimburses the employee for expenses incurred.

The SARS Employer’s Guide says that to simplify administration, it is acceptable and treated as tax free if an amount equal to one month’s basic salary is paid to the employee to cover settling in costs (excluding those related to transport, temporary accommodation and the purchase and/or sale of a residence). In other words, all the costs set out above in the 3 bullets may be paid by the employer, excluding settling in costs, and the employee in addition may be paid up to one month’s basic salary free of tax to cover settling in costs.  Of course, such payment must be made over and above the normal salary – you can’t just pay one month’s salary free of tax, and not also pay that month’s normal salary which is subject to tax.

I have given you rather a long winded answer, as I think you need to understand what SARS allows free of tax and why they allow it.

Dealing now with the specific question you have asked, you will see from the third bullet above that the employer can also pay for up to 183 days of temporary accommodation, while the employee is finding permanent accommodation.  That is 6 months accommodation, not just 4 months as you have stated.  However, this cannot be paid as an allowance to the employee – it must be the actual cost of temporary accommodation.

nuQ will issue new tax tables if it is only rates that have changed, or will change the system and issue an upgrade to accommodate any program changes required, all at no extra cost. These updates are distributed electronically and utilise nuQ's built-in automatic database update functionality, to ensure that the system is kept up to date with minimal manual intervention required.

No, the standard system is delivered with all functionality required to run a fairly straightforward payroll system. There are also some templates that can be applied to create more complex functionality. This means that nuQ delivers a lot of payroll functionality pre-built, and customisation is only required in specific areas where unusual or complex rules apply.

There are a number of nuQ resellers who are authorised to sell, implement and support the nuQ system. Most of our resellers have highly specialised IT and/or HR/Payroll expertise and can offer a large number of value-added services with the nuQ system. Please refer to the sales and suppport page for a list of authorised resellers.

Implementation time and cost varies according to the complexity and size of the payroll(s) and generally could take anywhere between 1 day for a very small, straightforward payroll to months for a large, complex payroll. Contact one of our resellers for more information.

Yes, the default language in which the system is issued is English, but all names and labels throughout the system can be translated and then used in any language.

Yes, it is possible to generate payslips in the employee’s preferred language. Payslips can also be generated in the employer’s preferred language, as would be required for filing purposes.

The payroll administrator will be able to see the payslip displayed in his/her own language, even though the employee will have a copy in another language.

The wonderful flexibility of the nuQ payroll calculation engine means that it can be used to cater for literally any country's payroll requirements, no matter how complex or simple.

The list of countries that the nuQ payroll is used in is growing constantly and currently (February 2009) includes South Africa, Mozambique, Botswana, Namibia, Kenya, Uganda, Tanzania, Democratic Republic of Congo, Swaziland, Lesotho, Ghana, Zambia, Dubai, Saudi Arabia, & Angola.

YES!!

This depends largely on the complexity involved (which may vary considerably from country to country) and the availability of necessary information, and could take anything from a few weeks to months.

The nuQ software licensing price structure consists of a once-off initial license fee and a monthly support and usage fee thereafter. Both the initial fee and the monthly fee are based on the number of employees paid per month on the payroll. For the exact prices, please contact one of our resellers.

Yes.

We are very proud of our reports in nuQ. The standard system is delivered with a large number of reports. These include various costing and variance reports that are typically required in a payroll environment, and some of the reports feature drill-down functionality that makes effective reporting and analysis easy to understand. Statutory reports required for each tax authority for which the system is localised are also included with the system.

Any report writer tool capable of interrogating an SQL database can be used, although Crystal Reports is recommended. Crystal Reports is used for the development of all standard nuQ reports. However, it is important to note that most reports required for payroll purposes are already included in nuQ and the system also features a number of "generic" reports that allow flexible reporting (particularly of payroll output data) in the system without any need to write custom reports.

Yes, the nuQ system architecture provides wonderful scalability – from a single PC to run a small payroll up to a powerful SQL Server with a web-server farm and potentially thousands of PC’s attached through the internet or the organisation’s intranet, handling huge payrolls with even hundreds of thousands of employees, the application remains unchanged. As the organisation grows, additional users can still make use of the existing infrastructure. Since no special software needs to be installed on users' PC's this expansion is effortless. If the organisation continues growing to a point where the existing infrastructure becomes overloaded, additional web servers can be added to improve performance. Once again this expansion is fairly easy and can even be done without any system downtime. The nuQ pricing structure has also been designed to accommodate growth.

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The system requirements for running the nuQ software varies a great deal depending on the workload that will be placed on the system. For smaller payrolls the system can run on a standalone computer (more or less entry-level desktop) with a Microsoft Windows XP Professional or Vista operating system using the free MSDE version of Microsoft SQL Server. Very large payrolls may require several servers and more advanced operating systems or database platforms. Required software includes, Microsoft Internet Information Services (the Microsoft web server software bundled with many Microsoft operating systems), Microsoft .NET framework (available free of charge from Microsoft), Microsoft Internet Explorer Web Controls (available free of charge from Microsoft) and Microsoft SQL Server.