To comply with Binding General Rulings 40 and 41, which SARS issued to clarify the employee’s tax consequences of income earned by a non-executive director, effective from 1 June 2017, the following new tax statuses are available for selection on the Employee Tax Definition for employees linked to a RSA employer:

• Resident Non-Executive Director - No Tax
• Non-Resident Non-Executive Director - Statutory tables
• Non-Resident Non-Executive Director - Temporary/Part-time
• Non-Resident Non-Executive Director – Directive%

Steps on how to apply the new non-executive tax statuses:

Step 01:

Create a new tax record on the employee’s tax definition screen.

On the Navigation Pane:

• Expand Employee Management
• Double-click on Employees
• Click on Employee Details
• Click on Tax Definition
• Click on New

• Select Close the ACTIVE tax record and create a new active tax record.

• Select Start Date when the person will become a Non-Executive Director.

Step 02:

• Select the applicable Non-Executive Director status
• Click on Save

Step 03:

Non-Executive Directors are not liable to contribute to the Unemployment Insurance Fund. Employees linked to any one of the new non-executive director tax statuses will be automatically linked to the Independent Contractor UIF Status.

Step 04:

Skills Development Levy contributions will not be calculated for employees linked to any one of the following tax statuses:

• Resident Non-Executive Director - No Tax tax
• Non-Resident Non-Executive Director - Statutory tables
• Non-Resident Non-Executive Director - Temporary/Part-time
• Non-Resident Non-Executive Director - Directive%

Step 05:

• Non-Executive Directors are not eligible for Employment Tax Incentive.

Step 06:

Any income received by non-executive directors for the period after 1 June 2017 until the new tax record has been created must be manually moved from the old tax record to the new tax record. Please contact our support team if you are unsure of how to do this.

Income normally reported as 3601 / 3651 will be reported as:

• 3620 / 3670 for employees linked to the Resident Non-Executive Director - No Tax tax status.
• 3621 / 3671 for employees linked to any one of the following tax statuses:
  • Non-Resident Non-Executive Director - Statutory tables
  • Non-Resident Non-Executive Director - Temporary/Part-time
  • Non-Resident Non-Executive Director - Directive%

NOTE:  Sage 300 People will automatically change to the correct IPR5 code when you change the Tax Status to any of the above Non-Exexcutive Director statuses.

NOTE:  SARS has indicated on their website that resident director’s fees should be disclosed against IRP5 code 3620 and travel reimbursements should be disclosed against IRP5 code 3702 or 3703, whichever is applicable.