Variable Remuneration (Section 7B)

Variable Remuneration (Section 7B)

• 27 March 2020
• Payroll
• The Tax Faculty

Important:

This Tax Law Change is effective from 1 March 2020.

The timing of accrual and incurral of variable remuneration must be on the payment basis and will only be included in the income of the employee (and be taken into account for employees’ tax purposes) and be expenditure incurred by the employer, on the date of the actual payment.

Section 7B = Timing rule

The definition of “variable remuneration” was amended effective 1 March 2020.

Prior to amendment 'variable remuneration' means:

• Overtime pay, bonus or commission contemplated in the definition of 'remuneration' in para 1 of the Fourth Schedule;

• An allowance or advance paid in respect of transport expenses as contemplated in section 8(1)(b)(ii) or (iii); or

• Any amount which an employer has during any year of assessment become liable to pay to an employee in consequence of the employee having during such year become entitled to any period of leave which had not been taken by the employee during that year

From 1 March 2020 ‘variable remuneration’ will additionally include:

• Any night shift allowance;

• Any standby allowance; or

• Any amount paid or granted in reimbursement of any expenditure as contemplated in section 8(1)(a)(ii)

Proviso added to sections 8(1)(b)(ii) & (iii):

Where an allowance or advance is deemed to have accrued under section 7B to the recipient in the year of assessment during which that allowance or advance is paid, the distance travelled for business purposes in respect of which that allowance or advance is received shall be deemed to have been travelled during the year in which that allowance or advance is paid.

Webinar Commentary

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