SME companies should brace themselves for the bi-annual PAYE tax reconciliation process which starts early in September 2011. The closing date is yet to be confirmed by SARS, but speculation is that employers will have until the end of October 2011 to complete their submissions.
“It is important that companies bear in mind that the bi-annual submission is completed for reconciliation purposes only. Payroll, HR and Finance departments should not issue the tax certificates to their employees,” says Grant Lloyd, MD of payroll and HR software specialist Softline Pastel Payroll.
SARS will inform companies closer to the time if they will release a new version of the online e@syFile system. The e@syFile system must be downloaded and utilised to upload and submit electronic IRP5/IT3(a) tax certificates together with the EMP501 Reconciliation Declaration for the period 01 March 2011 to 31 August 2011.
“Even though the filing season only opens in September, companies can use the time to prepare for the compulsory electronic submissions with full employee tax details to ensure their houses are completely in order for this second bi-annual PAYE reconciliation,” says Lloyd.
Certificates without income tax reference numbers will not be rejected, but will be accepted as an incomplete submission and penalties will be raised on incomplete submissions. It is the employer’s responsibility to ensure that each employee has a valid income tax reference number to prevent incomplete tax certificates from being submitted during the bi-annual submission period.
Companies should use the preparation season to ensure that their income tax reference numbers that were returned by SARS after the 2010/2011 filing season are captured on each employee’s record.
Companies should obtain income tax reference numbers from employees that were appointed from 01 March 2011 to 31 August 2011. If these new appointments do not have income tax reference numbers yet, register them using eFiling. Before terminating an employee’s service during the period 01 March 2011 to 31 August 2011, companies should ensure they have the employee’s income tax reference number.
Employers who have automated payroll software systems will find it simple to execute the reconciliation process, as they need only capture employees’ information and their payslips.
During the reconciliation process automated payroll software ensures the electronic tax certificates are generated automatically in the required file format. This file can be imported directly into SARS e@syFile. The EMP501 Reconciliation Report to complete the PAYE, SDL and UIF reconciliation declaration on SARS e@syFile can be generated for the period 01 March 2011 to 31 August 2011 directly from the payroll software. This saves businesses considerable time and cost compared to manual calculation and capturing.
In addition to the EMP501 Reconciliation Report, Pastel Payroll offers customers the ability to import a file containing employee income tax reference numbers from SARS e@syFile. These income tax reference numbers would have been generated by SARS during or after the 2010/2011 PAYE filing season and returned to the SARS e@syFile application as part of the bulk registration process.