The issue is whether an employer, a local authority, is required to deduct PAYe from compensation payments in terms of the COID Act? Bear in mind that the municipality is exempt from being an employer in terms of the Act and manage its own fund. However t
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
We may not have enough information to provide the guidance required. You state that “the municipality is exempt from being an employer in terms of the Act and manage its own fund”.
Section 10(1)(gB)(i) exempts from normal tax any compensation paid in terms of the Workmen’s Compensation Act, 1941 (Act No. 30 of 1941), or the Compensation for Occupational Injuries and Diseases Act, 1993 (Act No. 130 of 1993).
The exemption therefore applies if the compensation is paid in terms of the Compensation for Occupational Injuries and Diseases Act. It is not a tax related issue, but we are not sure if the ‘own fund’ meets this requirement.