Praxima Newsletter Issue 10 : February 2010

Dear valued client

The New Year usually ushers in challenges and for the payroll/HR department, this is no exception. Tax year end is upon us and the imminent changes often create complexity and sometimes confusion. We hope this newsletter will clarify some of the more significant changes, allowing you to better prepare for the new tax year.

An ongoing issue for organisations' is managing risk and if your outsource service provider does not adhere to best practice principles and quite frankly, good common sense, this can have an impact on your company. We highlight our efforts to minimise our risk and in turn yours, hopefully providing you with a sense of security knowing that your payroll is in good hands.

And as with all our newsletters, we profile one of our valued staff members - this issue sheds some light on Maritza Britz, providing an overview of her role within Praxima as well as a glimpse into her personal life.

We at Praxima wish you a successful tax year end and would like to assure you, our customer, of our full support and attention.

Yours sincerely

Peter Ibbotson
Executive Chairman, Praxima Africa Payroll Systems

As the end of the financial year is approaching, it is useful to remind ourselves of the changes SARS has made to tax administration. Despite the transformation to a far more simple income tax process over that last 2 tax filing seasons, SARS has experienced difficulties resulting from the poor quality of information contained in tax returns. This impacts the efficiency of the process and as a result, SARS has brought in new requirements for the submission of tax certificates and employer reconciliations for PAYE, SDL and UIF.

The following requirements, which are effective from the 2009/2010 year of assessment, should be noted by our clients:

• Tax certificates submitted to SARS will be in a format as required mandated by SARS from 2009/2010.
• The electronic tax certificates imported into SARS will include an Employer Trade Classification code.
• Employer and Employee Addresses must be submitted using the following format:
  • Unit Number
  • Complex Name
  • Street Number
  • Street/Farm Name
  • Suburb/District
  • City/Town
  • Postal Code
• Tax certificate numbers will need to be 30 characters long and will have to consist of the following components:
  • Employer: PAYE Reference Number
  • Tax Year
  • Unique combination of 16 characters
• Passport Country of Issue must be supplied if a Passport Number is entered for an employee.
• Income Tax Reference Numbers are required for each employee.
• Contact Telephone Numbers are required for each employee.
• Business and Residential Address details are mandatory for each employee.
• Employee Bank Account details are required for employees not paid in cash.
• Tax Certificates will be limited to two pages:
  • Page 1:Employer and Employee Demographic information
  • Page 2: Employee Financial Information. Limited to 13 Income and 7 Deduction Source Codes.
• Total UIF and SDL contributions will be included on each employee tax certificate.

These changes aim to reduce the costs of meeting income tax obligations for both SARS and taxpayers as well as more effectively ensuring compliance of taxpayers. More changes are on the horizon for the next year of assessment - we will keep you posted!

Sharon Tayfield, Operation Director at Praxima , appeals to clients to assist in ensuring that we have all the information that is needed to ensure that we can meet the deadlines set by SARS in terms of the submission of the Electronic certificates.

By Peter Ibbotson, CEO at Praxima Africa Payroll Solutions

In the business of payroll, reliability is everything. That's why at Praxima, it is essential that a resilient infrastructure is in place, capable of ensuring business continuity in even the most unlikely scenarios. From minor glitches to worst case scenarios, it is important that no matter what happens, we are able to meet strict deadlines.

Our backup or 'cold site' is a measure against potentially disastrous 'physical' situations - such as a fire, flood or a plane crash into the building. In such cases, it would be necessary to leave the premises, and all employees would be able to migrate to the cold site. The current data would be uploaded, from data kept offsite, to the backup servers and the mail server set to receive mail. As most staff work using notebooks, they are easily able to quickly connect to the backup network.

A generator on the premises is capable of running all the electrical requirements in the office so the company can continue to operate in the event of a power outage. It is automatically activated when an outage occurs to avoid even minimal disruption to work.

Praxima's communication infrastructure consists of three fixed line and one wireless connection, in order to ensure no disruption. Today, the vast majority of business communication is conducted via the internet so it's vital to ensure that this communication channel isn't impeded, even for a small amount of time.

The security of the information stored on the premises also needs to be safeguarded. The servers are kept in a double walled air-conditioned room secured by a safe door, the premises are securely burglar barred and there are both inside and outside burglar alarms linked to an armed response service. All desktop and notebook drives are encrypted with 256bit key, so even if they are stolen they cannot be accessed and no sensitive information can be retrieved.

Added to these measures, it is vital to practice 'good governance' procedures, which facilitate high availability in case of an emergency situation. For example, daily backups are completed and taken off site in order to ensure that the company will be up and running in a short period of time if a disaster occurs. Good practice also dictates that when the payroll closes, batches are immediately uploaded to the bank account - so that if something happens on our side, the bank will still be able to process the payment timeously.

There is no room for delay when it comes to payroll - salaries need to be paid on time without fail. One of the major advantages of outsourcing payroll is the peace of mind that comes with knowing your payroll is in good hands. And that's why Praxima places high availability at the forefront of its organisational goals and continues to look for new ways to ensure that deadlines are met - in the face of any disaster.

Travel eLogbook
The income tax system allows taxpayers who receive a travel allowance to claim a deduction for the use of their private vehicle for business purposes. In order to claim a deduction, the first step is to record your vehicle's odometer reading on 1 March each year (the first day of the tax year for individuals) and again on the last day of February the next year (the last day of the tax year for individuals). These opening and closing readings give you your total kilometres travelled for the year. TIP: sms your own car's kilometre reading as on 28 February 2009 to your own cell phone for safekeeping.

Recording your mileage will help you make an accurate claim when submitting your tax return.

You can now keep record of your travels by completing this online logbook. You may also download the logbook to your PC or you may print a hard copy and complete it at your own leisure.

Recommendation Should any of your staff not fulfil all of the requirements in order to claim travel mileage up to at least 20% of their travel allowance when completing their IT12 they should advise your HR Manager. The travel allowance can be taxed at more than the mandatory 80% which should ensure that they do not have to pay in on assessment. A travel calculator is available from your HR to assist in determining the percentage which should be taxed to avoid paying in on assessment.

1. When did you join Praxima?
   I joined Praxima on the 1st of April 2007 - almost three years ago.
2. What is your role at Praxima?
   I am a Senior Payroll Administrator.
3. Did you study towards a career in payroll and HR?
   No, not at all. When I was young I wanted to be a lawyer. After I finished high school, I joined the National Defence Force, working in the payroll department. It was there that I realised that payroll was the perfect profession for me! I expanded my knowledge in the field by doing short courses on payroll, tax, reconciliation and so on, which opened up further opportunities for me. I then worked for an outsource payroll provider, which was a stepping stone for me to join Praxima!
4. What appeals to you about working for Praxima?
   I enjoy the challenges. Every day is demanding as the standard of work is very high. I like the fact that I am benchmarked against the best - Praxima only employs people who are highly skilled specialists. I also enjoy the fact that our Directors possess a wealth of knowledge and a wide range of expertise that they are able to share with us.
5. Why are you passionate about payroll/HR?
   I'm a figure orientated person and get immense satisfaction from solving problems. I thus love working with numbers and accounting in particular presents a stimulating challenge for me.
6. How do you make a difference to your clients?
   I am a very positive person and always try to add value where I can and go the extra mile. I think my knowledge and loyalty is appreciated by my clients, as is the fact that I'm always eager to learn more about them!
7. What are you interests/ hobbies?
   When I do have spare time I spend it with my children. I have two kids, one in Grade 0 and one in Grade 2. They can be quite a handful! I also occasionally make it to the gym.