The Taxation Laws Amendment Act will become effective on T-Day – 1 March 2015. The Act will have a significant impact on the employee benefits industry. In this follow-up newsletter we provide our clients with further guidance on how to prepare for the changes. Should participating employers make any changes? There is no need for participating employers to make any changes to the structure of their retirement fund. However, participating employers may want to use this as an opportunity to make changes to their employer/member contribution rates. The Administrator will have to be informed timeously of any such changes so that we can change the Special Rules of the participating employer concerned. Please note that any changes needs to be processed via the Administrator’s formal amendment process and approved by the FSB before the amendment can take effect. We do remind employers of the change in the taxation of Income Disability benefits (PHI). From T-Day premiums will no longer be tax deductible by members, but the benefit paid will be tax free. The Act also stipulates that employer contributions to retirement funds will be taxed as fringe benefits in the hands of employees. Since these tax changes may require an administrative payroll adjustment, we strongly recommend that participating employers obtain advice from their tax consultants to ensure their payroll is structured correctly. Read previous update here
