Tanya Tosen - Put Payroll On A Banting Diet

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Tanya Tosen - Put Payroll On A Banting Diet

2018-03-12

The way employers feel about their payroll department is best equated to the banting diet - no one naturally
cares about dieting, but everyone is worried that someone else is getting it right, in a better way.

Payroll departments have evolved over the years, from data processing to now being one of the most targeted SARS audit areas as well as having strategic importance, in whether you are remunerating employees as optimally as possible.

The concerns of business owners, executives and heads of payroll will broadly fall into three categories:

1. Do your employees understand their payslip and remuneration package structure?

The typical questions usually asked are:

Why are my taxes so high?
Other employers give better take-home and/or better benefits - what are we missing?
What is the tax on my increased salary?
What is the amount of tax on my bonus?
Why does my tax vary from month to month?
Why must I pay money to SARS when submitting tax returns?

Payroll professionals often rely on the payroll system to provide answers. They are normally disappointed, as the payroll system is only as good as the data captured into the system. A remuneration and employees' tax expert are the more correct skillset(s) to assist, thus understanding the inner workings of remuneration methodology and package structuring tax law.

The South African Reward Association (SARA) has its annual Tax Budget Update countrywide starting on 6
March 2018 in Cape Town, 8 March 2018 in Port Elizabeth, 13 March 2018 in Durban with the final session being held in Johannesburg on the 15 March 2018. This is not a normal budget update but is specifically aimed at how the Budget Speech, delivered on the 21 February 2018, tax law changes, impacts employee remuneration and take-home pay. SARA also has a two-day Package Structuring and Cost to Company workshop annually, for which the dates have yet to be confirmed. SARA is a non-profit organisation, so the events are either free for members or a nominal fee payable to cover costs. Details may be obtained from tanya@remunerationconsultants.co.za.

The organisation also offers more bespoke training solutions available for employers, where all stakeholders may attend. This would include getting payroll, human resources, finance and even shop stewards into one room. These deliver incredible value to transform a lagging payroll department or just making sure you offer the best in the market.

2. SARS Payroll Audit

Everyone who has been through a SARS specialist payroll audit will know this is a completely different exercise than the "assurance check" done by external auditors. SARS is using a fine-tooth comb to assess and find any type of exposure that can be used to generate additional revenue to fill their deficit.

The upside of an independent payroll audit is not only ensuring full compliance with employees' tax, IRP5 codes and other risk items; but also includes a gap analysis on whether internal processes may be improved as well as missed opportunities on employee remuneration structuring.

3. Package Structuring - Qualitative Approach

There are two types of remuneration experts - those who determine how much you should pay an employee (the quantitative side) and those who are experts on how the determined quantum should be delivered to the employee for the best possible value (the qualitative side). The tools of package structuring include package structuring tools, travel allowance calculators, company vehicle vs travel allowance comparisons and total reward statements. These are used as part of the recruitment/onboarding process and "before" payroll i.e. to structure packages correctly before loading onto the payroll system.

For more information please contact Tanya Tosen, she is a remuneration and employees' tax expert.

Email tanya@remunerationconsultants.co.za or call 084 955 0796.

Tanya Tosen - Put Payroll On A Banting Diet

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