Enquiries:
All enquiries must be referred to the local SARS branch offices.
South African Revenue Service
LEHAE LA SARS
299 Bronkhorst Street, Brooklyn
Private Bag X923
Pretoria, 0001

The new Unemployment Insurance Contributions Act will come into operation on 1 April 2002. This new legislation will be administered by the Commissioner for SARS and bring the collection of Unemployment Insurance Fund (UIF) contributions in line with the collection of employees’ tax (PAYE) and skills development levy (SDL).

In terms of the new legislation, employers who -

• are liable to register with SARS for the payment of PAYE and/or SDL purposes or
• have registered voluntarily with SARS for the payment of PAYE purposes

must pay the UIF contributions in respect of all their employees to SARS. Those employers who are not liable to register and have not registered voluntarily with SARS for PAYE and/or SDL purposes but are liable for the payment of UIF contributions, must continue to pay such contributions in respect of all its employees to the Unemployment Insurance

It should be noted that the basis of calculating the contributions has changed in terms of the new legislation. The contributions payable by employers to SARS on a monthly basis are calculated at 2% of remuneration paid or payable to each of their employees during that month. 1% must be deducted or withheld from such remuneration. Employees and employers are therefore contributing in equal shares of 1 % each.

The 2% contribution is currently limited to the first R 8 099 remuneration paid or payable to an employee during a month. Employees who earn more than R 8 099 per month are therefore also liable for the payment of UIF contributions with effect from 1 April 2002. R 8 099 is the current maximum remuneration limit and can be adjusted from time to time by the Minister of Finance by means of a notice in the Government Gazette.

The contributions are based on the remuneration as calculated for PAYE purposes before the deduction of allowable contributions to pension and retirement annuity funds and, where applicable, medical aid contributions (gross remuneration).

Certain types of remuneration and remuneration paid to certain employees are excluded from UIF contributions. These exclusions are as follows -

• commission, pension, annuities, leave gratuities upon termination of service, retrenchment packages, restraint of trade payments, lump sum payments from pension, provident and retirement annuity funds,
• employees who are employed for less than 24 hours per month, employees who receive remuneration under learnership agreements (registered in terms of the SDL Act), foreign employees who are to be repatriated upon termination of service contracts, domestic and seasonal workers.

The monthly EMP 201 return for remittance of PAYE and SDL has been adjusted to make provision for UIF contributions as from April 2002 (due date for payment is 7 May 2002). The amount of remuneration to be reflected on the return against "Remuneration/Leviable amount" under UIF (field no. 3) is the remuneration taken into account when calculating the contributions for that month. The remuneration of each employee that exceeds the R 8 099 limit, types of remuneration excluded from the contribution and remuneration of employees not liable to contribute as described above should not be included in this amount.

Payment of the UIF contributions can be made via the existing methods available for payment of PAYE and SDL. In the case of First National Bank payments, employers are requested to use the correct reference numbers (including tax type indicator and month) as well as the account numbers printed on the EMP 201 return to ensure the correct allocation of payments by SARS. Separate deposit slips must be completed for each of the PAYE, SDL and UIF payments and separate electronic transactions should be initiated if paid through electronic facilities.

All employers (including those employers registered with SARS) are required to furnish details of their employees to the UI Commissioner and not to SARS. Full details in this regard will be included in the document referred to below or is available from the UI Commissioner at telephone number (012) 337 1680 or the UIF website (www.uif.gov.za).

Further information in this regard will be included in the EMP10 (a) Guidelines to Employers: Skills Development Levy and Unemployment Insurance Fund Contributions, Volume 43 (for the 2003 tax year) which will be available on the SARS website (www.sars.gov.za) under "PAYE", "Employer Guidelines" shortly. A copy of the Unemployment Insurance Contributions Bill is available on the SARS website under "Bills and Acts".