The current remuneration uncertainty could be used as key competitive advantage for the smart employer.
Using remuneration packages has always been a key differentiator in attracting and retaining skills. However, companies are facing significant compliance pressures, which have made structuring enticing employment benefits exceptionally tricky.
There have been a slew of new requirements and changes from SARS over the past year, not least of which remain the requirements laid out in the First and Second Tax Amendment Bills of 2010.
"It is almost impossible to be completely compliant, given all the recent and expected new requirements. There are upwards of 165 pages relating to tax and remuneration in the two tax amendment bills alone. Companies wishing to remain attractive to the limited skills pool will need to have a very good understanding of how these work," explains Jerry Botha, partner at Tax Consulting.
Botha points out that the confusion over new travel allowances, conflicting advice on medical aid contributions and the new penalty regime has left employers paralysed with uncertainty.
"Your business may be looking forward to better trading conditions, but so is SARS. While companies have been riding out the recession, there has been plenty of work done behind the scenes to ensure more collection," says Botha
Some interesting implications from proposed legislation include:
* SARS is legislating against the VAT waiver of interest, meaning it can never again be waived, regardless of the circumstances;
* The new tax laws on company vehicles is ³old news² 4% fringe benefit tax on company vehicles, will soon be computed on a value which includes VAT and maintenance plans. This means that company vehicles will soon be extinct.
Botha says companies will also have to ask if their business and processes are geared for the new monthly declaration process, compulsory employee tax registration process, compulsory fields and the newly proposed penalty regime.
Remuneration has become one of the most important competitive advantages for many companies. Budgetary constraints have put a damper on outright salary increases and employers are looking for smart ways to make the most of what they can offer staff. For two companies competing for the same good skills out there, a good package can mean the difference between skills excellence and mediocrity.
While the complexities of new legislative requirements and corporate governance guidelines continue to cause HR and finance departments severe headaches, CRS Technologies believes the new tax regime to be a boon for forward thinking companies.
"There are a number of work-arounds still out there. The cunning HR manager will have equipped themselves to structure an appealing employment offering. They should combine enough knowledge of what is coming down the legislative line, along with software tools that automate as much of the bureaucratic requirements as possible," explains James McKerrell, CEO of CRS Technologies.
"It is time for HR in South Africa to become the strategic management resource it deserves to be. The most forward thinking, and successful global companies rely on their HR teams to give them the competitive edge through insight, savvy and an ability to manage ahead of the regulatory curve," McKerrell concludes.
CRS will be hosting conferences in four provinces, where Jerry Botha will explain the new 2010 and 2011 tax requirements, King III guidelines and explore some practical competitive tactics for companies looking to attract superior skills.