The Minister of Finance proposed a possible reduction in the remuneration threshold with regards to Unemployment Insurance Fund (UIF) contributions in the 2015 Budget. The Minister proposed to reduce the remuneration threshold from the current monthly amount of R14 872 to R1000 for a one year period.
Should the reduction possibly take place in the next tax year, it will mean that both employer and employee will be required to pay a maximum of R10 each per month. The current maximum payable is R148.72 per contribution per month. This means a monthly maximum of R148.72 for Employee and R148.72 per month for the employer contribution, which total a monthly maximum of R297.44. The Minister’s proposal for the reduction is aimed at the employers and employees contribution, while he aims to keep the benefits unchanged.
The reduction in the contribution is aimed at giving some extra support to households across the country as well as the employers, keeping the current challenging economic environment in mind. The Minister commented that the reduction in UIF could possibly put almost up to R15 billion back into both workers and employers pockets, which will also in return, provide much needed support to the economy.
The reduction was proposed to take effect on 1 April 2015, but the Minister later on advised that the possible reduction will not be implemented in the 2015/16 tax year.