VIP Payroll

2.3.1 Balance of Remuneration (Paragraph 2(4), 4th Schedule)The amount of employees’ tax to be withheld from the employee is calculatedon the balance of remuneration, which is the remuneration remaining afterdeducting:• current and arrear contributions to approved pension fund schemes andretirement annuity funds that are processed on the payroll, within specifiedlimits (see Deductions, section 5),• at the option of the employer, current and arrear contributions to approvedretirement annuity funds by the employee for which proof was provided,within specified limits (see Deductions, section 5),• at the option of the employer, income replacement policy contributionswhich the employee has paid directly and supplied proof thereof annually,not subject to any limit,• contributions made by an employee to a registered medical schemethat are processed on the payroll if the employee is 65 or older. (seeDeductions, section 5),• at the option of the employer, contributions to a registered medical schemewhich the employee has paid directly and supplied proof of, if the employeeis 65 or older. (see Deductions, section 5) and• any donation by the employee, made by the employer for which theemployer received a S18A(2)(a) receipt, within specified limits (seeDeductions, section 5).Employees’ tax calculated in terms of a directive is based onremuneration and not on the balance of remuneration.2.3.2 Net Remuneration (Paragraph 11B(1), 4th Schedule)Net remuneration is calculated by excluding certain items from balance ofremuneration. These items include amongst other:• remuneration paid to employees who are not in standard employment(temporary employees),• remuneration paid to a director of a private company or a member of aclose corporation,• travel allowances,• public office allowances,• annuities from benefit funds and• lump sums from retirement funds.Payroll Pocket Guide 2013|2014© 2013 Sage VIP11