National Budget Speech 2023
Update: 04 May 2023
The correct OID earnings threshold for the 2023/2024 period is actually R568 959, not R563 520, as was first published by the Government Gazette. Please read our separate blog post here for more information.
Update: 24 February 2023
All of the changes mentioned in this blog post have been implemented and will take effect on payslips from 1 March 2023. Payslips with dates before 1 March 2023 will continue to apply the previous rules.
Original Blog Post
On 22 February 2023, the National Treasury presented South Africa’s 2023 Budget Speech. Individual taxpayers will be pleased to learn that there will be no major tax proposals implemented this year, as the Tax revenue collections for 2022 exceeded expectations. Instead, there will be adjustments to the personal income tax tables and taxable allowances for inflation.
Several legislative changes have also been announced by government that affect the OID earnings threshold, BCEA earnings threshold, and National Minimum Wage.
We’d like to remind you that there is no need to do a manual year end as in other payroll systems – simply continue processing payslips into the new tax year. When you need to do your filing, the correct period will automatically be used and the relevant documents will be generated. For more information, please see our help site.
As always, our team will implement the necessary changes to our system timeously to ensure that your payroll remains compliant with the tax changes. From 1 March 2023, your payroll will automatically meet all the requirements for the 2023 / 2024 tax period. If you are still processing payroll for the 2022 / 2023 tax year, our system will continue to apply the old tax tables.
In this blog, we briefly discuss how these announced changes will affect your payroll.
2023 / 2024 Tax Rates and Rebates
In order to adjust for inflation, the personal income tax brackets and rebates will be adjusted by 4.9%. These adjustments will increase the annual tax-free threshold for persons under the age of 65 years from R 91 250 to R 95 750.
Tax Rates from 1 March 2023 - 29 February 2024
Medical Aid Tax Credits
The medical aid tax credits will also increase from 1 March 2023:
- The tax credit for the main member and first dependant will increase from R347 to R364 per month.
- For every additional dependant, the tax credit will increase from R234 to R246 per month.
Subsistence Allowances
Where an employee is entitled to a subsistence allowance, the daily amount in respect of meals and incidental costs will increase from 1 March 2023:
- The allowance granted to pay for incidental costs only will increase from R152 to R161 per day.
- The allowance granted to pay for meals and incidental costs will increase from R493 to R522 per day.
SARS did not adjust the subsistence allowance for expenditure incurred outside of the Republic of South Africa this year.
Rates per Kilometer
SARS adjusted the fixed rates per kilometer which are used when calculating travel allowances from R4.18/km to R4.64/km.
OID Earnings Threshold
The Director-General of Employment and Labour has increased the OID Earnings Threshold from R529 264 per annum to R563 520 per annum. The annual earnings threshold applies to each employee, which indicates the maximum amount of an employee’s earnings on which the OID contribution can be calculated.
BCEA Earnings Threshold
In the same vein, the Minister of Employment and Labour has increased the BCEA Earnings Threshold from R224 080.48 per annum to R241 110.59 per annum. Employees who pass the BCEA Earnings Threshold will enjoy the full protection of the BCEA.
National Minimum Wage Increase
It was also recently announced that the National Minimum Wage Rate will be increased from R23.19 to R25.42 per hour with effect from 1 March 2023. The wage rates set in the various sectoral determinations have also been increased proportionally. For more details, please refer to this media statement by the Minister of Employment and Labour.
This increase will impact employers claiming ETI. As our system uses the wage regulating measure or minimum wage to determine whether an employee qualifies for ETI, users will need to update their applicable rates in order to stay compliant. For more information in this regard, please view our ETI Management on SimplePay help page.
We hope that this information has proved useful to you. If you have any questions on how the information provided relates to SimplePay, you can contact us at info@simplepay.co.za.
Related Links:
- 2023 Budget Speech
- Budget Speech Highlights
- SARS Tax Pocket Guide
- SARS Tax Rates
- SARS Medical Aid Tax Credits
- SARS Subsistence Allowances and Advances
- SARS Rates per Kilometer
Equally, if you are not yet a client of SimplePay but would like to be, why not check out our website? Or, better yet, try out our service for free with our 30-day trial, get acquainted with our user-friendly service by reading our getting started page, or take our free online course.
Keep well and stay safe.
Team SimplePay