The SA Revenue Service (SARS) has in recent days signalled a new approach with regards to the inclusions when calculating the SDL levy.
The SDL Act stipulates that an employer that pays, or is liable to pay, remuneration must, subject to the prescribed exemptions, pay the SDL at the prescribed rate of 1% of the leviable amount.
The 'leviable amount` is the total amount of remuneration paid or payable or deemed to be paid or payable by an employer to its employees during any month as determined for the purposes of the employees` tax (PAYE) in terms of the Fourth Schedule to the Income Tax Act, whether or not the employer is liable to deduct or withhold PAYE.
In terms of an amendment made to the Fourth Schedule of the Income Tax Act, which became operational from 1 March 2002, remuneration (i.e. the leviable amount) for the purposes of calculating the SDL includes payments for services rendered by directors of private companies and salaries of members of close corporations as defined. This applies even if the director or member is the sole employee of the company or close corporation.
This directly contrasts with the pre-2002 amendment to the Income Tax Act in terms of which remuneration specifically excluded amounts paid or payable to a director of a private company (which included amounts payable to a member of a close corporation) for services rendered or to be rendered by him or her to that company, unless, in a specific instance, the Commissioner for SARS otherwise directed. Hence, these amounts are now subject to the SDL.
A further issue that appears to have caught SARS` attention, which follows upon the abovementioned, is the inferential reasoning that gains made by directors of companies (or, for example, employee share incentives schemes) are to be included in the leviable amount for SDL purposes. This is the case, for example, if any employee, in recognition of service is given an option to acquire shares for R100 each and exercises the option at a time when the shares have a market value of R500 the gain of R400 will be included in his or her income. The definition of remuneration includes these gains and hence they are subject to both SDL and PAYE.
The SDL Act dictates, that should the levy not be paid over within the prescribed period, interest at the prescribed rates as defined in the Income Tax Act will be charged and, in addition, a penalty equal to 10% of such outstanding amount will be imposed. It must be considered that any payment will be allocated firstly to outstanding penalties, then to outstanding interest and finally to outstanding levy.
In terms of the penalty provisions any person who renders "false" information could face imprisonment for a period not exceeding one year.
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