We provide specialist tax consulting services for employers. This include tax opinions on all South African taxable items to employees, the employer’s employees’ tax compliance thereon, payroll compliance items, tax risk management items and best practices on employee remuneration, where there is complete tax risk free approach to employee remuneration, whilst providing the employee with the best possible salary structuring. Our services also extend to most African countries, especially Southern African locations. Our typical engagements will include the following:
Remuneration Structuring / Salary Structuring / Compensation and Benefit Best Practices
We provide remuneration structuring best practice for around 40 large South African employers. The concept of remuneration structuring has the philosophical base of aligning employee remuneration with personal financial requirements. This is not necessarily tax structuring, albeit that the tax effect is a logical effect of the employee choices made. We provide salary structuring tools for employers and employees, including a web-based or intranet model. This allows the seamless structuring of employee remuneration in a tax compliant manner, which aligns to policies, enables immediate reporting to finance, human resources, employee benefit providers and, most importantly, the actual payroll function. Our model also includes total reward statements. This ensures that employee is fully aware of all components of their remuneration structure, the tax effect of each and how this impacts the employee value proposition.
Travel Allowance / Car Allowance / Company vehicle / Employee Travel Solutions and Best Practice
We have performed analysis and extensive implementation of employer travel solutions. This includes travel allowance and company vehicle review, various employee travel comparison calculation modelling tools, employer risk management sign-offs, fringe benefit tax calculators, employee yearend claim functionality. The recent tax changes to employer provided travel has forced many employers to re-think the tax and cost benefits of employer provided vehicles. The tax treatment of petrol cards, business insurance, travel reimbursements and all similar business travel costs, must all be considered to achieve a tax optimal solution. We also assist with the drafting of travel policies, obtaining of buying-in from the finance and human resource teams into employee travel methodology.
Employee Benefit Review
We provide a critical review of employee benefits and make firm recommendations to unlock value. This includes review of the cost and employee value proposition. Unlike actuaries or benefit providers, which focus on the macro effects of the structures in place, our focus is individual employee centric. This means that we search for the critical value for the employee personally and the value proposition delivered by that employee, taken the costing and tax structure. This includes recommendations on group life cover, disability insurances, retirement structuring, including the impact of the new fiscal rules hereon. We operate under Financial Services Board License, however, our recommendations are aimed at a gap analysis on which benefits can be enhanced and where the employers value proposition is not aligned with market best practice and have not kept up with fiscal changes. The business case is then normally created for revisit to the employee benefit methodology, which, once determined, will impact the exercise to determine what the current providers may do better and the potential value proposition of other providers. We have extensive and recent examples of where considerable saving has been unlocked, despite the assurances of trustees and incumbent advisors that the employee benefits provision is operated optimally.
Tax Gross-up Calculators
We provide various calculators for the business to ensure correct tax gross-up, including on expatriate employees, special purpose incentive schemes which are delivered net of tax, long service payment gross-up calculators, where long service is not aligned with the tax exemptions and any other employee tax calculator. These calculators protect employee take-home pay, achieves equitability amongst employees, ensures attraction and retention of employees and provides full tax risk management and an audit trial for compliance purposes.
Are all your wage types and payroll elements correctly coded for IRP5 purpose and treated accurately for taxation purposes?
Absolute payroll accuracy is imperative in any organisation to ensure compliance with relevant laws and regulations in South Africa. It is critical that management mitigate risks to ensure there are no tax exposures on their payroll(s).
Our services extend to payroll reviews and audits to assist organisations in attaining complete compliance to tax laws. Our expertise incorporates employee benefits, employee communication on remuneration and reward and generally providing leading practises and innovation.
We perform payroll reviews of the company’s payroll at a detailed level, to determine the completeness and accuracy of the payroll information, payroll wage-type set-up and whether this is aligned to company policy and bargaining unit agreements (where applicable), Fund rules, various insurance related elements per Insurance company premiums / unit rates, relevant tax legislation and other Statutory Laws
We have in-depth experience on all items relating to employee payroll and we are comfortable that there are no areas of payroll which are too complex to cover.
We rely on the company to provide us with accurate information on a first-time basis in order be as efficient as possible when reviewing the company’s payroll. We recommend –
Data information gathering.
The effective delivery of a payroll audit significantly depends on receiving first time accurate information. This encompasses detailed salary extracts, additional client specific items such as a breakdown of fund rules, company policies and bargaining unit agreements to name but a few.
All payroll data, Fund, medical aid and other data collected during phase 1 will be consolidated and prepared for review. During this phase of the project the data will be validated and refined with the company representative.
Re-calculation and verification of payroll elements.
Package elements will be re-calculated in accordance with the Statutory Law, Income Tax Act, Fund rules, Insurance provided premium percentages, unit rates, medical aid and plan selections and per best practice payroll set-up and principles.
Wage type set-up verification in relation to the following items (amongst others) –
This process will include the verification of the payroll wage type set-up, to ensure accuracy and alignment to the respective governing company remuneration and payroll policies, rules and agreements.
OUTCOMES OF PAYROLL AUDIT
The final deliverables will be provided on the completion of a payroll audit and typically include –
- Report containing the payroll review findings, payroll best practice and recommendations on corrective action to be taken;
- Excel-based appendix containing the re-computations of all payroll items and where incorrectly treated on the payroll, the reconciliation items clearly identified to enable corrective actions are taken on the payroll;
- Payroll wage type set-up and treatment matrix, containing the current payroll wage types set-up methodology for each of the remuneration structure types (basic plus benefits and Cost-to-Company) in relation to the company policies, Fund rules, bargaining council agreement(s), Insurance provider rates / premiums, etc., indicating where there are discrepancies; and
- Final feedback sessions to present the outcome of the payroll review and verification process.