Pretoria, 22 October 2019 – Employers are reminded that they have two weeks before the Employer Interim Reconciliation tax period closes on 31 October 2019. The reconciliation period opened on 23 September 2019.
As with other stakeholders and taxpayers, employers are called to join hands with SARS in building the fiscus for South Africa’s development agenda. For the 2017/2018 fiscal year, PAYE constituted 96.4% of the total Personal Income Tax collected (Reference: SARS’ 2018 Tax Statistics publication, Chapter 1, Table A1.4.2).
The interim reconciliation period for employers covers the six-months’ transaction period from 1 March to 31 August while the final annual reconciliation is for the full tax year from 1 March to the last day of February, and must be submitted during April and May. This totals two reconciliation declarations that employers are required to make during the year of assessment to ensure that employee IRP5/IT3(a) certificates are accurately issued on time for the personal income tax filing season.
During the reconciliation periods, the employer must confirm or correct the amounts they declared in the first six months of the tax year for Pay-As-You-Earn, the Skills Development Levy, their Unemployment Insurance Contributions and the Employment Tax Incentive (ETI), as well as payments made and tax values reflected on their employees’ IRP5 /ITR(a) tax certificates. The elements that must reconcile are the monthly declarations, payments made – excluding penalty and interest payments – and the values for Pay-As-You-Earn, Skills Development Levy, and the Unemployment Insurance Contributions reflected on the IRP5/IT3(a) certificates.
Amongst the changes for this year’s interim employers’ reconciliation period, is that the Employment Tax Incentive has been extended by ten years to 2029. The Employment Tax Incentive (ETI) is an incentive that aims to encourage employers to hire young job seekers. It reduces the cost of hiring young people by reducing the amount of Pay As You Earn (PAYE) owed to SARS without affecting the employees’ wages.Employers qualifying for the Incentive need to submit the EMP501 reconciliation before the end of October to claim any monthly Incentive amounts that have not been used during the first six months (March to August).
Employers who do not submit and claim for the first six months (March to August) will forfeit any Employment Tax Incentive credit due to them.
Employers who wait to submit during the Annual Reconciliation period will only be able to claim the credit amount for the second six-month period (September to February), but not for the first six month periods.
Enhancements
The Employer Interim Reconciliation period sees the following enhancements:
- A new HTML5 form on eFiling for increased usability and real-time messaging.
- New source codes have been entered on the IRP5/IT3(a) section of the form which incorporates the legal amendments applicable to the current tax year.
- A simpler process to validate employment tax calculations for IRP5/IT3(a) certificates
- A statement of account for periods prior to 2008 can be requested.
Filing channels
SARS e@syFile™ Employer is a tailor-made platform designed to help taxpayers who are employers or payroll administrators, to manage their tax affairs. Employers can file via eFiling or e@syFile™. With eFiling, up to 50 IRP5/IT3(a) certificates can be submitted while with e@syFile™ the number is limitless. Branch filing is limited to five certificates only.
Registering employees for income tax
SARS has developed bulk registration solutions on e@syFile™ for employers to register their employees for income tax and automatically obtaining income tax numbers for these employees. This therefore does not require the employee to visit a SARS branch to obtain an income tax number.