CAS3701
Assignment 11
DUE 13 September 2024
, TASK 1: LearnCo. Limited Payroll System
a) Registration of Non-Facilitator Employees as Taxpayers Legal
Requirements:
According to the Income Tax Act No. 58 of 1962 (ITA) and the Tax Administration
Act No. 28 of 2011 (TAA) in South Africa, any person who earns taxable income
must be registered as a taxpayer with the South African Revenue Service (SARS).
Taxable income includes earnings from employment, such as salaries, wages, and
benefits.
Income Tax Act: Section 1 of the ITA defines “gross income” as all amounts received
by or accrued to a person, whether in cash or otherwise, during a tax year, excluding
exempt income. This would include the R15,000 monthly salary paid to the five
nonfacilitator employees (cleaners and gardeners).
Tax Administration Act: Section 22 of the TAA states that all employers are required
to register as employers with SARS and to deduct th e correct amount of tax (PAYE)
from the remuneration of their employees and pay this over to SARS. This
requirement is compulsory regardless of the employee’s income level unless the
income is below the tax threshold (which is not the case here).
Conclusion:
Given that the five non-facilitator employees are earning a gross monthly salary of
R15,000, they are above the income tax threshold and must be registered as
taxpayers. The fact that they are not registered is a violation of the ITA and TAA.
This also implies that LearnCo. is not fulfilling its legal obligation to withhold PAYE
and UIF contributions for these employees, which could result in penalties and
interest from SARS.
b) Recommendations for Correcting the Treatment of Employees' Salaries
Financial Records:
Reclassification of Expenses:
Assignment 11
DUE 13 September 2024
, TASK 1: LearnCo. Limited Payroll System
a) Registration of Non-Facilitator Employees as Taxpayers Legal
Requirements:
According to the Income Tax Act No. 58 of 1962 (ITA) and the Tax Administration
Act No. 28 of 2011 (TAA) in South Africa, any person who earns taxable income
must be registered as a taxpayer with the South African Revenue Service (SARS).
Taxable income includes earnings from employment, such as salaries, wages, and
benefits.
Income Tax Act: Section 1 of the ITA defines “gross income” as all amounts received
by or accrued to a person, whether in cash or otherwise, during a tax year, excluding
exempt income. This would include the R15,000 monthly salary paid to the five
nonfacilitator employees (cleaners and gardeners).
Tax Administration Act: Section 22 of the TAA states that all employers are required
to register as employers with SARS and to deduct th e correct amount of tax (PAYE)
from the remuneration of their employees and pay this over to SARS. This
requirement is compulsory regardless of the employee’s income level unless the
income is below the tax threshold (which is not the case here).
Conclusion:
Given that the five non-facilitator employees are earning a gross monthly salary of
R15,000, they are above the income tax threshold and must be registered as
taxpayers. The fact that they are not registered is a violation of the ITA and TAA.
This also implies that LearnCo. is not fulfilling its legal obligation to withhold PAYE
and UIF contributions for these employees, which could result in penalties and
interest from SARS.
b) Recommendations for Correcting the Treatment of Employees' Salaries
Financial Records:
Reclassification of Expenses:
