2021 COIDA Assessments: Compensation Fund

[Johan99]

For information to members:

A) Section 85 (1) and Section 78 reductions on the standard tariff rates were withdrawn with effect from 1 March 2021 - GG 44331 of 25 March 2021. This has the effect that the second leg of the assessment would not apply the reduction. Depending on your reduction rate and assessment, this can be a significant amount.

B) Some of the sub-sector tariff rates charged differs from that promulgated in GG 43959 of 3 December 2020. From 25 different sub-classes submitted so far, we found 14 to be incorrect. We have discussed with senior staff at the Fund and the current feedback is that the assessment is correct and that an errata would be published regarding the GG.

C) We have a client that had a Section 85 reduction of 70% and, over and above the removal of the reduction on the second leg as per A), had their reduction reduced to 40%. Staff of the relevant section informed us that notifications to effected employers are in the process of being drawn up and that effectively all reductions previously granted would be limited to 40%. Again, depending on your reduction rate and assessment, this can be a significant amount.

[Dave A]

Easier to change the Government Gazette notice than to change Compensation Fund's systems...

[Dave A]

Returns for this year (2020 according to the ROE system) only opened in April. I filed our return yesterday (12th April) and now that I have received the emailed assessment, I see a Sec 83(6) 10% penalty has been raised against the Final Assessment 2020 value. How can the Commissioner raise this penalty when the deadline for returns has been extended due to their system not being ready timeously?

Where can one send an appeal against the raising of this penalty charge?

[Johan99]

Dave,

GG 44329 dated 25 March provides more information and even a template to do so. The bulk of objections against assessments consist of errors relating to earnings declared and the forms leans heavily towards this. The good part of the notification is that employers now have 60 days to object as previously they had 30 days to do so - GG 40406 of 7 November 2016.

The "where to send it to" question is a bit more perplexing as the GG just states that it must be submitted. In our experience revision of assessments were done jointly by two internal departments namely assessments and finance. If you are in Pretoria I would recommend a visit to their offices and getting your copy of the objection stamped. If not, a visit to your local DOL satellite office would be advised. Alternatively, you could send the documents via e-mail to CFCallcentre@labour.gov.za which should route your request to the correct department.

We heard unofficially that up to 14 000 e-mails per day are received on that e-mail address, so it might take some time to have your request attended to.

[Johan99]

An update to the original post -

GG 44409 corrected the error of GG 43959 by revoking the 2020 tariff column in full and providing a new list applicable to the 2020 leg of the assessment.

There were also a few fixes to the 5-year phase-in schedules which would be helpful for budgeting purposes.

To date no official communication has been received regarding the capping of Section 85 reductions to 40%. We further received information that reductions of 15%, 25% and 35% would be reduced to 10%, 20% and 30% respectively. Once we receive official notification, we will provide further feedback.

[Dave A]

The bulk of objections against assessments consist of errors relating to earnings declared and the forms leans heavily towards this. The good part of the notification is that employers now have 60 days to object as previously they had 30 days to do so - GG 40406 of 7 November 2016.

No kidding. Given the challenge is in respect of the questionable raising of the penalty, will I really have to submit the EMP501 and AFS (I assume for the 2021 Tax Year)?

The "where to send it to" question is a bit more perplexing as the GG just states that it must be submitted. In our experience revision of assessments were done jointly by two internal departments namely assessments and finance. If you are in Pretoria I would recommend a visit to their offices and getting your copy of the objection stamped. If not, a visit to your local DOL satellite office would be advised. Alternatively, you could send the documents via e-mail to CFCallcentre@labour.gov.za which should route your request to the correct department.

We heard unofficially that up to 14 000 e-mails per day are received on that e-mail address, so it might take some time to have your request attended to.

What I have done already is forward the assessment under covering email to CFCallcentre@labour.gov.za with the following content:

Dear sir/madam,

The attached assessment refers.
Employer reference number: 990000xxxxxx
Bill Doc No: 900537xxxx

I note that a section 83(6) penalty has been raised in this return. Given that the deadline for submission of the return of earnings was extended to 31st May 2021 per the notice at http://www.labour.gov.za/DocumentCen...20deadline.pdf the reason for the raising of this penalty quite clearly is not due to late submission of the return.

Please advise me the reason for the raising of this penalty, or reverse same and advise me accordingly if it was raised in error.

I look forward to your prompt response.

Yours faithfully

[Johan99]

Dave,

What you have done is the logical way to respond, so lets see what transpires. The problem however is that you will only receive your Letter of Good Standing once the account is paid in full. If the penalty is not a material amount and the LOGS is important for operating, we normally suggest to our clients to settle the account. Once the objection is attended to and allowed, the credit would be available to offset against the following year's assessment.

[Dave A]

The problem however is that you will only receive your Letter of Good Standing once the account is paid in full. If the penalty is not a material amount and the LOGS is important for operating, we normally suggest to our clients to settle the account. Once the objection is attended to and allowed, the credit would be available to offset against the following year's assessment.

In essence, that is my plan.

Thanks for all your help, Johan.

[Dave A]

UPDATE: This morning I have received an updated assessment (email sent at 7.30 a.m. this morning).
The penalty line has been removed