South Africa’s Income Tax Act. No. 58 of 1962 prescribes that employers must deduct the correct amount of tax from employees, pay this amount to SARS on a monthly basis, reconcile these deductions and payments during the annual and interim reconciliation, and issue tax certificates to employees. But this can be a daunting process, and that is why leading HR and HCM services provider CRS Technologies is established to help.
As part of the process, employers are required to send monthly employer declarations to SARS – a so-called EMP201 payment declaration that serves as a breakdown of PAYE, SDL and UIF payment allocations and ETI (Employment Tax Incentive) amounts.
CRS Technologies explains that the SARS modernisation has enhanced the reconciliation tax system to the extent that reconciliations, submitted in realtime, will validate the reconciliation submitted against both the IRP5/IT3 (a) certificates and EMP201 submitted.
To assist businesses, the company has identified several channels that can be used to complete and send the declarations. These include eFiling, e@syFile™ Employer – via SARS eFiling using an eFiling username and password, and manually at a SARS branch (although only applicable for employers with a maximum of five employees)
“It is important to note that SARS no longer accepts EMP501 forms in a drop box at branches,” says Sandra Maritz, Legislation Business Consultant at CRS Technologies. “Also adjustments to reconciliation submissions be made by sending a revised EMP501.”
5 steps to straightforward reconciliation submissions, based on SARS directives: –
- Determine the total income of each employee for that year and recalculate the tax based on that amount.
- If there is a difference between the recalculated liability (according to the tax certificates) and the EMP201s previously declared – it will need to be determined when.
- Capture all the relevant demographic information in the Business Information and Contact Details sections.
- Ensure that the question is answered that relates to the reconciliation including ETI or not. If the answer is ‘yes’ to the question, the ETI (Employment Tax Incentive) containers will be populated on the EMP501 form.
- Capture all the monthly liabilities for PAYE, SDL and UIF using these revised figures in the Financial Particulars section on the EMP501.
“It is important to ensure that all information is accurately documented … this is the first basic step. From there, it can be fairly straightforward, but, as always, CRS Technologies has the expertise and experience to assist clients and guide them through regulation,” Maritz adds.