Tax filing season for employers almost over

The deadline is approaching for employers and other third-party providers to submit their data and employer reconciliation declarations (EMP501) to the South African Revenue Service (SARS) together with tax certificates (EMP501 and IRP5/IT3(a)’s).

Filing season for employers commenced on 1 April and closes on 31 May. This means employers and other third-party agents who have not yet submitted their reconciliation documents to SARS, have until 31 May to comply with this tax obligation.

Companies are required to complete and declare the latest and accurate payroll information (PAYE, UIF and SDL) about their employees and the amounts they have paid to SARS.

The data that must be submitted should include the monthly employer declarations (EMP201) information, payments made and tax certificates (IRP5/IT3(a)’s) generated, covering the full tax year from 1 March 2020 to 28 February 2021.

The consequences of SARS payroll tax non-compliance:

• Employers may be fined or face an imprisonment of up to two years if they fail to submit correctly completed EMP201 or EMP501 returns to SARS on time. They may suffer the same consequences if they have deducted or withheld employees’ tax from their employees but did not pay it over to SARS.

• Issuing an IRP5/IT3(a) if you are not an employer or you have not been authorised by the employer to issue an IRP5/IT3(a) is also a criminal offence. Similarly, if an employer fails to issue an IRP5/IT3(a) to an employee, the employer is guilty of a criminal offence.

• Importantly, especially following the Covid-19 pandemic causing many businesses to close their doors, employers need to notify SARS should they have ceased to be an employer. They also have to ensure that their final reconciliations are submitted to SARS and employees are issued with a final IRP5/IT3(a).

Employers need to be aware of the following penalties which are imposed on employers who:

• Fail to submit a complete EMP501 reconciliation on or before 31 May – they will be penalised for each month that a complete reconciliation remains outstanding.  Depending on the number of months outstanding, the penalty is up to 10 per cent of the total employees’ tax liability.

• Fail to pay any amount of employees’ tax for which the employer is liable to SARS on or before the due date for payment – they will be penalised by an amount equal to 10 per cent of the outstanding amount.

The EMP501 and IRP5/IT3(a)s can be submitted easily and conveniently using the latest version of e@syFile™ Employer or through eFiling for those with 50 or less employees. A video is available on SARS’ YouTube channel.

Employers are cautioned that once a reconciliation document has been submitted through a specific channel, any amendments for the same reconciliation period can only be made through the same channel.

For more information on how to be compliant, visit www.sars.gov.za

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