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SARS have introduced a new mid-year legal submission requirement that will impact
all employers. The process compels all employers to submit reconciliations and tax
certificates to SARS encompassing 2011 year to date tax figures up until the 31st
of August 2010 where the filing period will commence as of the 1st of September
to the 31st of October 2010 (these dates will be confirmed by SARS at a later stage).
To assist employers with their February 2010 submission SARS relaxed many of the
demographic mandatory fields. The time has come to now re-instate those demographic
fields as mandatory for the 2010 bi-annual submission. The new requirement to submit
tax certificates bi-annually is an administrative process at a specified point in
time, and is not subject to the same requirements as those for the end of a year
of assessment.
It must be emphasised that it is a legal requirement for employers to submit their
details in time and failure to do so will result in penalties.
- Bi-annual tax certificates i.e. IRP5's etc, may only be issued to SARS and may
not be issued to employees.
- Bi-annual tax certificates will reflect a maximum of 6 months of income and deduction
information.
- When reporting on employees specifically for Bi-annual tax certificates, active
employees are reported on differently to terminated employees in the following ways:
Employees who are still active after the 31st of August 2010:
- Total employee tax to be reflected against code 4102 (PAYE) i.e. the total employees’
tax amount must not be split into SITE and PAYE, or
- Code 4101 (SITE) and/or 4102 (PAYE) separately. PaySpace calculates current and
YTD splits between SITE and PAYE, and we will therefore be using this mechanism
to report tax figures.
For employees whose employment was terminated prior to the closing of the bi-annual
period:
- Tax certificates will reflect financial information for the period actually employed.
- Code 4101 (SITE) and/or 4102 (PAYE) separately. PaySpace calculates current and
YTD splits between SITE and PAYE, and we will therefore be using this mechanism
to report tax figures.
- The calendar month in the tax certificate number (code 3010) must be specified
as ‘02’ to indicate that this is a final tax certificate for the year, and not an
interim bi-annual certificate. The same certificate is submitted to SARS again at
the end of the tax year as part of the final submission.
SARS have changed certain demographic field validation rules from optional to mandatory.
The table below provides a breakdown of the fields as well as how PaySpace will
cater for these:
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Mandatory Field
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Field Explanation
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PaySpace Delivery
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Employee Trade Classification
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This refers to the activity code according to the VAT 403 Trade Classification guide
applicable to your business.
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Housed on the company basic profile screen where the client can choose the trade
classification and sub classification.
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Passport Country of Issue
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Where the employee does not have a valid ID number and a passport number is specified,
the passport country of issue is now a mandatory requirement.
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Validations are already in place when specifying a passport number
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Employee Business Telephone Number
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The client can specify the employees' business telephone number under “work number”
on the Employee PaySpace basic profile. If this is not updated, the PaySpace tax
year end engine will use the companies’ business telephone number.
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Employee Business Address Details
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The PaySpace tax year end engine will use the companies’ business address details.
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Employee Residential Address Details
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Validation has always been in place on the employees’ address details tab on the
basic profile.
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Directive Number
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This refers to the number of the directive issued by SARS relating to any specific
lump sum income payment
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Validation has always been in place on when recording a lump sum payment on the
edit payslip screen.
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Employee account holder relationship
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Refers to whether the banking details being specified relate to the employees’ own,
joint or third party account.
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All employees’ banking details will default to “own”. The user can change this on
the employee banking profile.
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- Despite the fact that the employee tax reference number is still an optional field,
SARS will provide employers with the ability to verify income tax reference numbers
of their employees and initiate the registration of their employees for income tax
purposes if they are not registered. This platform that SARS are providing offers
all employers the opportunity to register their employees and indicates that the
tax reference number will become mandatory in the near future.
- This process is only applicable in respect of employees with a nature of person
indicated as A (individual with identity or passport number), B (individual without
identity or passport number), C (director of a private company/member of a CC) or
N (pensioner).
Two new facilities have been put in place to facilitate the registration of un-registered
employees for income tax.
1. Bulk registration of all employees who are on the payroll at the end of
August.
All tax certificates that are submitted to SARS at the end of August that do not
have an income tax number, will be included in a process that firstly checks and
validates the employee’s demographic information on the tax certificate, and then
uses the tax certificate information to register the employee for income tax. Once
SARS goes through the validation process, feedback in two forms; either the new
income tax number will be supplied or a reason describing why the registration could
not be done, will be returned to the employer in e@syFile, from where it can be
manually updated in the payroll.
The bulk facility described above that will trigger the process with the submission
of the reconciliation will only be available for the 2010 bi-annual submission.
After the 2010 bi-annual implementation employers will be required to submit a specific
request to verify employees’ income tax reference numbers or register employees
for income tax.
Note: SARS have informed us that the task of verification for bulk
registration is extremely complex. As a result of this, SARS have provided an indication
on when employers can anticipate the return of these tax numbers as February 2011
(As this is merely an indication it could be earlier or later).
2. Individual registration of employees who are employed after August 2010.
Employees who are newly employed from September 2010 onwards can be registered by
the employer for income tax, whereby the employer utilises e@syFile and submits
an ITREG to SARS. The ability to register individuals by capturing the information
and submitting one by one requests will be available. The ability to import an ITREG
CSV file into e@syFile will be implemented at a later stage. In both cases, once
the employee’s demographic information has been validated, the employee will be
registered for income tax and the employer and the employee will be informed of
the income tax number, or if not successful, the reason for the failure of the registration
will be communicated to the employer.
Note: Although SARS originally stated that they would be ready
with the electronic ITREG process (whereby software vendors were supplied with file
formats for this function), it appears that the only new electronic mechanism available
from September onwards to register new employees is through e@syFile on a per employee
basis. The new employee bulk ITREG process will be available in PaySpace as soon
as SARS can cater for this requirement.
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