Tag Archives: UIF ceiling increase

Is UIF paid on overtime?

What should I get out in total after PAYE and UIF if my salary is R14700-00 and my overtime was R4055-17? Tax you will pay / PAYE (Pay As You Earn) for your age group and income bracket: R 2716.12 (as per PAYE tables provided by SARS)
Take home pay = Gross salary – PAYE – UIF


UIF / Unemployment Insurance Fund is levied at 1% of your taxable income, at most R148.72/month
Take home pay = R 18755.16 – R 2716.12 – R 148.72
Take home pay: R 15890.32

In summary, UIF is calculated on gross and gross includes overtime.

More Information on UIF

Is UIF calculated before or after tax?

CALCULATING UNEMPLOYMENT INSURANCE FUND (UIF) CONTRIBUTIONS


UIF is Calculated on gross income. The calculation of UIF is not a simple matter of applying 1% to the gross pay of an employee. The calculation of the amount of income that is subject to UIF, is set out in the UIF Act and the Income Tax Act.

The Unemployment Insurance Contributions Act, 2002 states the following:
“Subject to subsection (2), the amount of the contribution payable in terms of section 5 –
a) by an employee, must be one per cent of the remuneration paid or payable to that
employee by his or her employer during any month; and
b) by an employer in respect of any one of its employees, must be equal to one per cent of the
REMUNERATION paid or payable by that employer to that employee during any month.


REMUNERATION means “remuneration” as defined in paragraph 1 of the Fourth Schedule to the Income Tax Act, but does not include any amount paid or payable to an employee –
(a) by way of any pension, superannuation allowance or retiring allowance;
(b) which constitutes an amount contemplated in paragraphs (a), (cA), (d), (e) or (eA) of the
definition of “gross income” in section 1 of the Income Tax Act; or
(c) by way of commission”
Following from this, the Income Tax Act, 1962 (Act, 1962 defines “remuneration” as follows:
“Remuneration” means any amount of income which is paid or is payable to any person by way of any salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument
pension, superannuation allowance, retiring allowance or stipend, whether in cash or
otherwise and whether or not in respect of services rendered, including–
a) any amount referred to in paragraph (a), (c), (cA),(d), (e), (eA) or (f) of the definition of
“gross income” in section one of this Act;
b) any amount required to be included in such person’s gross income under paragraph (i) of
that definition;
bA) any allowance or advance, which must be included in the taxable income of that person in
terms of section 8(1)(a)(i), other thani) an allowance in respect of which paragraph (c) applies;
ii) an allowance or advance paid or granted to that person in respect of
accommodation, meals or other incidental costs while that person is obliged to
spend at least one night away from his or her usual place of residence in the
Republic”
and so forth – refer to the relevant act for more information

More Information on UIF

Is UIF taxable?

Any payment that you receive from the UIF is tax-free. This includes a pay-out as a result of being without a job or because of maternity leave. If you have taken maternity leave and are planning on or have received a payment from the UIF, you will not pay tax on this income

HOW MUCH MONEY CAN WORKERS CLAIM?

If you have been contributing to the Fund for four years or more, then you can claim for up to 238 days. If you have been contributing for a shorter period, then you can claim 1 day for every 6 days that you worked while you were contributing to the Fund. If you take maternity leave, you can only claim up to 121 days. The Fund pays a percentage of the wage/salary that you earned while you were contributing to the fund. The highest amount that can be paid is 58% of what you earned per.

More Information on UIF

Who must pay UIF?

Employers must pay unemployment insurance contributions of 2% of the value of each worker’s pay per month. The employer and the worker each contribute 1%. Contributions are paid to the Unemployment Insurance Fund (UIF) or the South African Revenue Services (SARS).


UIF Application

The Unemployment Insurance Act and Unemployment Insurance Contributions Act apply to all employers and workers, but not to –

  • workers working less than 24 hours a month for an employer;
  • learners;
  • public servants;
  • foreigners working on contract;
  • Employees in receipt of an old age pension are, since 07/2/2007, no longer excluded from contributing towards UIF; or
  • workers who only earn commission.

Domestic employers and their workers are included under the Act since 1 April 2003.


UIF Contributions Payable

The contribution that employers must deduct from a worker’s pay is 1% of the worker’s total earnings, excluding commission. In addition to the 1% deducted from the worker, the employer also contributes 1% for every worker that they employ.  The total contribution paid to the UIF is therefore 2%.

Example:

If a worker earns R1 000 per month, the employer must deduct 1%, namely R10. In addition, the emloyer must pay R10 for that worker. The total of R20 must therefore be paid to the UIF or SARS.

          
Earnings Ceiling

Workers who earn more than the annual, montly or weekly maximum earnings ceiling must also contribute to the Fund, but their contributions are worked out on the maximum earnings ceiling.

          
Example:

If a worker earns R10 000 per month and the monthly earning ceiling is R1 096 per month, the worker’s contribution will be worked out on R8 836.

       
What employers may not do UIF

Employers may not –

  • deduct more than 1%;
  • deduct outstanding amounts when they fall behind with payments; and may not
  • ask a fee for deducting the money.

If employers deduct too much money by accident, they must pay the extra money back to workers.

Based on Legislation in Section 6 and Section 7 of the Unemployment Insurance Contributions Act


UIF Payment of Contributions

Employers must pay the 1% they deducted from workers, together with the 1% they have contributed, to the UIF or SARS before the 7th of every month.

Example:

Contributions due for January, must reach the UIF or SARS on or before 7 February. If the 7th day of a month is not a business day, employers must pay on or before the last business day before the 7th. “Business day” means any day that is not a Saturday, Sunday or Public Holiday. Based on Legislation in Section 8, Section 9, of the Unemployment Insurance Contribution Act

More Information on UIF