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Notes and Assignment

(1) The mandatory payroll creditors in Zimbabwe are: ZIMRA (tax on employee income calculated based on tax tables and remitted by the 10th of each month), Standards Levy (0.5% of gross wage bill remitted quarterly), NSSA (9% total contribution with 4.5% each from employer and employee), and Zimdef (10% of gross wage bill remitted by the 15th of each month). (2) Tax credits in Zimbabwe include credits for the elderly, blind, and physically disabled persons, as well as credits for medical aid contributions and expenses. Benefits such as housing and school fees are generally taxable, while deemed interest may apply to low

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105 views4 pages

Notes and Assignment

(1) The mandatory payroll creditors in Zimbabwe are: ZIMRA (tax on employee income calculated based on tax tables and remitted by the 10th of each month), Standards Levy (0.5% of gross wage bill remitted quarterly), NSSA (9% total contribution with 4.5% each from employer and employee), and Zimdef (10% of gross wage bill remitted by the 15th of each month). (2) Tax credits in Zimbabwe include credits for the elderly, blind, and physically disabled persons, as well as credits for medical aid contributions and expenses. Benefits such as housing and school fees are generally taxable, while deemed interest may apply to low

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Tatenda Gutsa
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Give four mandatory payroll creditors in Zimbabwe in class presentation.

State percentages and date


of submissions where applicable

(1) ZIMRA
 Tax Levied on income from employee
 Calculated based on tax tables
 P2 remittance forms are used
 Due date on or before the 10th of every month

(2) Standards Levy


 Administered by the Ministry of Industry and Commerce in terms of Standards Act of Zimbabwe
 Main objective is based upon of the Standards Levy is standardization and quality control.
 Calculated as 0.5% of the gross wage bill
 It is completely funded by the employer
 It is quarterly remitted

(3) NSSA
 Administered by NSSA Act of 1989
 Organization remits 4,5% whereas the employee remits another 4.5%
 NSSA is in two significant branches the first being NPS where equal instalments of 4.5% between
the employer and the employee are paid each to make 9% total.
 The other one is WCIF (Workers Compensation Fund), which is wholly funded by the employer, its
percentage contribution is based on risk factor

(4) Zimdef (Zimbabwe Manpower Development Fund)


 Purpose is for technical students when they are on work related learning
 It is wholly funded by the employer
 Percentage contribution is 10% of gross wage bill
 It is remitted on or before the 15th of every month.

NB…………………………………..Continuation on Allowable deductions from the previous lecture

4. Subscriptions to a professional institution

Continued subscriptions to a professional institution by an employee after having qualified in a


relevant field of study is an allowable deduction eg IPMZ subscriptions.
Proof in the form of receipts should be submitted to the employer

5. NEC Contributions

Cost should reduce your amount subject to tax

6. Trade Union subscriptions

7. Cost of renewal and replacement of tools.

This is applicable to qualified artisans whose contracts of employment requires them to buy tools of
their own trade.
8. Donations by an employee to:

National Scholarship Fund/National Bursary


Any charitable trust administered by the Minister responsible for Social Welfare and Health
State for use in:
(a) Construction, extension or maintenance of hospitals
(b) Purchase of medical equipment for hospitals
(c) Procurement of drugs for hospitals

NB. The benefiting hospitals for the three scenarios above should be either be operated by the state,
local authorities or religious organizations.

Tax Credits

These are amounts of money which are offset against a tax payers tax liability

Exemptions includes the following

(1) Elderly Person’s Credit


 This is a credit applicable to those employees who are over 55 years as at the 1 st of January each
year.
 A maximum of US $900 per annum or US$75 per month is granted
 Proof of birth certificate or national ID should be submitted to the employer.

(2) Blind Person’s Credit


 This is credit available to those employees who are permanently blind
 A credit of US 900 per annum or $75 per month is granted

NB Semi blind employees do not qualify.

(3) Physically disabled person’s credit


 Credit available to those employees who have a permanent physical disability.
 The employee can also claim this credit if he or she has a working spouse and any other children
who are permanently
 Sometimes referred to as transferable tax credit
 A credit of US$900 per annum or USD75 per month is granted in order to claim the blind disability
credits. One should obtain a letter from a medical Practioner certifying such disabilities or blindness
and submit it to Zimra who inurn will issue a directive to the employer as permission to grant the
credit.

(4) Medical Aid Contribution Credit.


 Credit is 50% contributions made by the employee to a medical aid society for himself or herself,
spouse and his or her biological or legally adopted minor children.
 Other dependents are excluded.

(5) Medical Expenses Credit


 Medical is also 50% of shortfalls or non-award for an employee, his or her spouse and biological or
legally adopted minor children
 Other dependents are excluded

Employees on medical Aid

 Those who are members of a medical aid society should first claim their reimbursements from the
medical Aid society and if there is a shortfall. It is a shortfall that constitutes a claimable medical
expense.
 The claim advice statement from the medical aid society should be given to the employer in the year
if it is received
 NB In instances where credits are more than the tax for the a particular month, the excess credit is
carried forward to reduce the tax payable in the following month but within the same year.

Practice Question

The following are remuneration details in respect of Angeline Matuke for the month of February 2022.
Basic Salary 25 000, housing allowance 10 000, Transport allowance 5 000, monthly grocery voucher
$2500, ordinary pension contribution 10%, NSSA as per ruling regulations. Angeline has a permanently
disabled daughter. During the month she donated to Jairos Jiri Association at a tune of 1500.

Required

In a clear format please do the necessary tax computations to determine Angeline’s tax liability for the
month of February 2022.

Taxation Benefits and allowances

 Taxation of benefits and allowances is governed by section 8 f of the income tax Chapter 23:06
 Benefits that are paid in companies differ from company to company
 Benefits that are paid in cash are easy to treat for tax purposes however technical problems arise in
valuation of benefits arising from the use of assets.

(1) Occupation of a Company House


 The commissioner’s yard stick states that in the case of rent-free house in a municipal area the open
market rental will prevail
 This is determined by the locality and accordingly can differ even if the size the size of the house is
the same.
 Where the house is located outside the municipal area the commissioner generally accepts 12.5% of
basic salary or 7% of the cost of the house whichever is greater.

(2) School Fees Benefit


 If a company or employer pays school fees on behalf of an employee either in cash or cheque form
such a benefit is taxable.
 The benefit is taxed in full in the hands of the beneficiary.
 It however permissible to spread the taxation of such benefit over 3 months taking into
consideration the school term is deemed to be 3 months
(3) Loan Interest Benefit
 If an employee is granted a loan with no interest below statutory or interest below statutory then
there is a deemed interest benefit accruing to such an employee.
 The deemed interest benefit is should be incorporated and taxed in the hands of the loan
beneficiary.
 The current statutory rate for loans is pegged at 5% plus LIBOR (London Interbank Offer Rate) of the
loan borrowed.
 The amounts attracting such a rate is 100USD and above
 The following scenario should be observed when dealing with loans
 If the loan is granted interest free, then the deemed interest benefit accruing to the borrower is 5%
plus LIBOR multiplied by the borrowed amount.
 If the loan is granted at a low interest e.g 3% then the deemed interest accruing to the borrower is
5% plus LIBOR minus 3% multiplied by the borrowed amount.
 If the loan is granted for education or medical treatment of the employee’s spouse or child then
there is no deemed interest benefit accruing to the borrower.

ASSIGNMENT : DUE DATE 02 APRIL 2021.

Study the following remuneration details in respect of Tatenda Gamanya a permanently disabled and
qualified class one bricklayer with Danhiko Institute, for the month of February 2022. Basic salary 50
000; Representative Allowance 10 000; Annual grocery voucher 12 00; During the month he purchased
a wheel chair for a permanently disabled daughter at a cost of 2500, Ordinary Pension contribution
1% ; NSSA as per regulations.

Required.

In a clear format please do the necessary tax computations to determine Tatenda’s Tax Liability for
the month of February 2022

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