Budget hints at future social security tax

Deborah Tickle

11 February 2009

The brunt of the changes that are to be introduced will place greater obligations on employers in respect of the tax compliance of their employees.

The 2009/2010 Budget suggests that various changes will be made to the administrative procedure adopted by Sars as it continues to implement fresh updates to its operations in order to modernise and improve the personal income tax collection process.

The brunt of the changes that are to be introduced will place greater obligations on employers in respect of the tax compliance of their employees. Some of these changes include obliging employers to reconcile employees' tax more frequently than the current requirement of once a year. In addition to this, employers will also have to start reconciling the skills development levies and UIF contributions of their employees. Certain employee data will have to be obtained and maintained by the employer so that they can report to Sars on such data when they are called to do so. It has also been proposed that employers, as well as other third-party data providers, will include and provide employees' and clients' tax reference numbers in order to comply with FICA requirements.

Various other measures are also being considered, such as whether to move to a single taxpayer account across different tax types, use a single interest rate on underpayments and overpayments of tax, and whether compound interest should be charged instead of the simple interest method currently being utilised.

Currently Sars is considering the efficiency of a single taxpayer registration process across multiple taxes and the automatic registration of employees. It is believed that this continuous development in the restructuring of individual income tax collection will lay the foundation for a future social security tax and would lead to an improved operational competence by Sars.

Deborah Tickle, Tax Partner at KPMG