SALARY STRUCTURING FOR MAGISTRATES Presented by DESMOND MAHAMU & KULANI DHUMAZI

TOPICS  Composition  Composition Practical Example  Flexible Portion Options

COMPOSITION  Basic Salary, State’s Contribution to GEPF & Flexible Portion  Basic Salary = 60% x Total Package  States Contribution to GEPF = 13% x Basic Salary  Basic + States GEPF Contribution = 67.8% of Total Package  Flexible Portion = 32.2% of Total Package

COMPOSITION PRACTICAL EXAMPLE  Grade JE, Pay Level 1 package of R758,574 structured:  Basic (60%) = R455,  State’s Contribution (13%) = R59,  Flexible Portion (32.2%) = R244,260.83

REMINDER!!!!!!!!!! EVERY MAN IS ENTITLED TO ORDER HIS AFFAIRS TO REDUCE THE AMOUNT OF TAX PAYABLE BY HIM -IRC V DUKE OF WESTMINSTER [1936] AC 1

FLEXIBLE PORTION OPTIONS  Motor Car Allowance  13 th Cheque  Medical Assistance  Housing Allowance  Non-Pensionable Cash Allowance  Any combination

MOTOR CAR ALLOWANCE  25% of total package (max)  Employee must own car & avail for business use  Tax benefit: 60% subject to PAYE, Monthly, Increases Net Amount  Must determine official business travel expenditure

 Use actual figures (vehicle limited to R360,000) Actual km’s & deemed cost per km Deemed figures (private:18,000km & business:14,000) MOTOR CAR ALLOWANCE (CONTINUES)

13TH CHEQUE  Annual payment in Birth Month  Fully taxable  Option to spread tax over a year

MEDICAL ASSISTANCE  Not obliged to include in structure  Taxed fully as fringe benefit if included in structure  Benefit is when contribution exceeds;  R570, if no dependants  R1,140, member plus 1 dependant  R1,485 plus R345 for additional dependants

MEDICAL ASSISTANCE (CONTINUES)  If excluded from structure, but contributes to medical scheme; - tax benefit: Annual deduction per prescribed capped rates

HOUSING ALLOWANCE  Any amount decided by employee  No tax benefit, fully taxable  Does not give an advantage when applying for housing loan

NON-PENSIONABLE CASH ALLOWANCE  Accommodate remaining on Flexible Portion  Fully Taxable

Q & A

HA KHENSA THANK YOU DESMOND: KULANI: