EMPLOYEES’ TAX [PAY-AS-YOU-EARN (PAYE)]

What's New? 

  • 6 October 2020 - Covid-19 PAYE Deferral Relief: Payment of Deferred Amounts

The Statement of Account (EPMSA) was amended during the first half of September 2020 to include detail of the monthly deferred payments [Payment Reference Numbers (PRN’s) and amounts] payable over the six month period from 7 October 2020 to 5 March 2021.

Affected employers can unfortunately not include the Covid-19 PAYE Deferred Relief payment due on 7 October 2020 in their September 2020 EMP201 declaration payments via eFiling:

  • Employers are required to pay the PAYE Deferred Relief payment separately via eFiling by using the PRN next to “COVID-19 INSTALMENT” for October 2020 on the EMPSA which is available on the eFiling profile.
  • Alternatively, employers may use the EFT payment option by using the “SARS-PAYE” beneficiary option under the SARS public beneficiary listed on the banking platforms and using the PRN on the EMPSA or the EMP201 declaration for September 2020. 

If any changes to this process is implemented before the next payment which is due on 6 November 2020, SARS will issue a further notice before that date.

  • 14 September 2020 - Known issue with Information code 4587

Information Code 4587 – Section 10(1)(o)(ii) exemption taken into account by the employer for PAYE purposes : Relaxation of validation rules for August 2020 (202008) Employer Interim Reconciliation.

SARS acknowledges concerns raised by payrolls that the application of the current validation rules for code 4587 may result in certain employers not being able to submit their interim IRP5/IT3(a) certificate information.

These validation rules as specified in the SARS Business Requirements Specification: PAYE Employer Reconciliation (2020 Release) version 19.4 will be relaxed for the August 2020 Employer Interim Reconciliation submission.

The relaxation of the validation rules will be implemented during the weekend of 19 September 2020 and the affected employers are requested not to submit their Interim Reconciliation documents before Monday, 21 September 2020.

These validation rules will be reviewed and clearly defined to provide clarity. An updated SARS Business Requirements Specification: PAYE Employer Reconciliation (2020 Release) will be issued shortly and the amended validation rules will be implemented towards the end of 2020.

  • 14 September 2020 - Employer Interim Reconciliation submission period is from 14 September to 31 October 2020

    During the Employer Interim Reconciliation, employers need to reconcile their Monthly Employer Declarations (EMP201) for the first six months of a Reconciliation Year (March to August) with the tax values of the interim IRP5/IT3(a) certificates for the same period and submit their Employer Reconciliation Declaration (EMP501). Read more on the changes below or click here for the letter to our stakeholders.

New source codes for the 2021 Year of Assessment

The following new source codes are applicable for the 2021 Year of Assessment:

    • Income code 3618/3668: Fund Administrators must use these codes to declare regular pension or purchased annuity payments originating from provident or provident preservation funds.

      The following income codes differentiate between pension or purchased annuity payments originating from the following sources respectively:
      • 3603/3653 – pension or purchased annuity payments originating from pension or pension preservation funds,
      • 3618/3668 – pension or purchased annuity payments originating from provident or provident preservation funds,
      • 3610/3660 – pension or purchased annuity payments originating from retirement annuity funds, and
      • 3611/3661 – taxable portion of a purchased annuity paid by long-term insurers not from a retirement fund.
    • Income code 3724: Employers must use this code to declare any payment received by their employees from a COVID-19 Disaster Relief Organisation. These payments do NOT include payments received from the Unemployment Insurance Fund (UIF) Temporary Employees Relief Scheme (TERS).
      • Payments from the UIF TERS are exempt from tax and must not be reflected on the IRP5/IT3(a) certificate issue by employers to their employees.
    • Deduction code 4055: Employers must use this source code to declare any donations made by employers on behalf of employees to the COVID-19 Solidarity Fund.
      • Donations made to other qualifying COVID-19 Disaster Relief Organisations must be declared under existing deduction code 4030.
    • Information code 4587: Employers must use this code to indicate the value of the section 10(1)(o)(ii) foreign remuneration exemption taken into account for calculating PAYE.



Excessive Liability Change Workflow

SARS have found that some employers do not capture the correct PAYE liability on the monthly EMP201 returns. The incorrect calculation of the monthly PAYE liability may result in imposition of penalties and interest. This includes corrections done on the EMP501 reconciliation and any shortfall is attributed to the last month of the reconciliation period.

As from the 2019 Year of Assessment, SARS is comparing the PAYE liabilities captured on the EMP501 with the PAYE liabilities declared in the EMP201 returns and processed in the accounts for the relevant months. If the liabilities captured on the EMP501 is significantly reduced, SARS will inform the employer of the said excessive liability changes per letter. SARS will request the employer to amend its EMP501 submission.  If the employer chooses not amend the EMP501 submission, SARS will route the EMP501 for manual intervention. SARS will determine if the changes are correct based on the reason provided by the employer. If the employer did not provide sufficient motivation, SARS will engage with the employer to resolve the issue.

Employment Tax Validation

The Employer Reconciliation process is a crucial first step in the wider income tax reconciliation process enabling SARS to issue individuals with their personal income tax return prepopulated with payroll data. This, together with information from other providers of third party information, makes it easier for individuals to fulfil their income tax obligations.

Therefore, it is important that the information contained in IRP5/IT3(a) certificates is correct. SARS will validate the employment tax liabilities declared on the IRP5/IT3(a) certificates and if inconsistencies have been identified, notify employers per letter on eFiling or [email protected]™.


New Notice of Non-Compliance Penalty Assessment

From the end of September 2020, a monthly Notice of Non-Compliance Penalty Assessment will be issued to employers showing all the imposition of penalties on the account for that specific month.


[email protected]™ changes

      • Enhanced resubmission function:
        When a resubmission of an EMP501 reconciliation is done, [email protected]™ will include all IRP5/IT3(a) certificates instead of only the amended certificates.
      • Time-out issue resolved:
        The time required to download the [email protected]™ Employer varies due to network and PC configurations. In some instances, employers get a time-out notification while the download is running and they have to login again. To address this, SARS had introduced a pop-up message to advise the user that he/she cannot use [email protected]™ functions while downloading the new version
      • Summary report:
        SARS will provide a summary report to employers with big payroll systems or use [email protected]™ to merge data from multiple payroll systems to verify the certificates included in a reconciliation submission. This function will be available under the EMP501 Reconciliation and will allow employers to extract a pipe delimited file for a specific period of reconciliation.

 

  • 31 August 2020 - DISASTER MANAGEMENT TAX RELIEF BILL [B 11B—2020] & DISASTER MANAGEMENT TAX RELIEF ADMINISTRATION BILL [B 12B—2020]

    The above-mentioned Bills are currently being considered by Parliament.  These Bills were passed by the National Assembly on 26 August 2020 and are now with the National Council of Provinces for approval before they are sent to the President for Assent.

    The following links may be used to access these Bills:
  • 28 August 2020 - Extension of COVID-19 PAYE Deferral Relief

    Although the amended Disaster Management Tax Relief Administration Bill to extend the deferral of the payment of employees tax liability for tax compliant small to medium sized businesses with one month until 31 August 2020 has not been published yet, it is confirmed that the amended Bill was passed by the National Assembly on 26 August 2020.

    The amendment specifically refers to the –
    • deferral being applicable to amounts deducted or withheld during the period commencing on 1 April 2020 and ending on 31 August 2020 with same requirements as previously, and
    • require the payment of the deferred amounts to be paid in six equal monthly instalments, commencing on 7 October 2020 and ending on 5 March 2021.

The amended Bill should soon become available.

Under the circumstances, SARS had no alternative to the approach followed with the COVID-19 Tax Relief measures to date, which is to implement the pending legislation before it is passed. The Statement of Account (EPMSA) will be amended during September 2020 to include detail of the deferred payments. This will enable qualifying employers to remain compliant.

  • 25 June 2020 - ​FAQ published for COVID-19 SASSA grant applications being declined with
    a SARS reason
    Question - ​​I’m unemployed and applied for the COVID-19 grant at SASSA but it was declined with a response ‘Registered at SARS for PAYE’ or ‘Receiving an income’?

    Answer - It should be noted that SASSA determines the criteria for paying of the grant or not. According to SASSA, to qualify for the grant, you need to be unemployed (not having any source of income) and not receive UIF or any other grants. Should this not be correct, please email SASSA on [email protected] if any complaints.

  • 18 June 2020 - Updated PAYE BRS for Employer Reconciliation (2020 release) version 19.04
    In this version the descriptions of the source codes for the donations to the COVID19 Solidarity Fund has been amended, as well as the ETI fields to cater for additional ETI that may claimed as part of the COVID19 Tax Relief.
  • EMP201 deadline extension
    An extension for submissions of EMP201 is granted until midnight of 8 June 2020 due to problem on 5 June when the SARS system was down. Returns received after 5 June but before midnight 8 June 2020 will not incur any penalties or interest. Employers who could not file their EMP201s would not be able to complete the ETI on their returns and will have to submit a request to SARS to process the ETI on their behalf.

  • 1 June 2020 - Employers Filing season is now closed. It was open from 15 April to 31 May 2020. You may still submit, but please note that penalties may apply.

  • 18 May 2020 - [email protected] version 7.0.5 was released
    • Introducing an updated EMP201 declaration to incorporate Covid-19 changes in legislation for SDL
      payment holidays
    • Adjustment to validation for source codes 7002 and 7005 to align with the SARS PAYE BRS, allowing
      but not expecting a zero balance under specified circumstances.

  • 12 May 2020 - Employment Taxes Validation (ETV)
    From the 2020 year of assessment, SARS is performing tax calculations on the IRP5/IT3(a) certificates. Where it is found that the incorrect amount of tax was deducted from the employee, a letter will be issued, accompanied by a file containing a list of the certificates that have failed the SARS calculation.  

  • 25 April 2020 - FAQs for Employers on Tax Relief for COVID-19

  • 23 April 2020 - Updated PAYE BRS for Employer Reconciliation (2020 release) version 19.03 was published. 

    The PAYE BRS for Employer Reconciliation (2020 release) has been updated with the requirements for the COVID-19 Tax Relief to enable employers to claim the increase of the extended ETI, declare donations to the Solidarity Fund and payments received from UIF.

  • 22 April 2020 - PAYE BRS for Employer Reconciliation (2020 release) version 19.02 was published.
    The PAYE BRS for Employer Reconciliation (2020 release) was updated with the requirements for the COVID-19 Tax Relief for ETI to enable employers to calculate the extended ETI.

  • 17 April 2020 - Printing of IRP5/IT3(a) certificates
    We are aware that employers may be experiencing problems with the printing of IRP5/IT3(a) Employees’ Tax certificates from the eFiling platform. We recommend that you submit your Employer Reconciliation Declaration (EMP501) to SARS but do not yet print any IRP5/IT3(a) certificates. We will inform you when printing of IRP5/IT3(a)s using the eFiling platform may resume.

  • 15 April 2020 - Employer Annual Reconciliation was open from 15 April and closed 31 May.

  • 3 April 2020 - Frequently Asked Questions on Tax Measures (will be updated on a regular basis)

  • 31 March 2020 - Updated PAYE BRS for Employer Reconciliation (2020 release) version 19.01 was published.

  • 4 September 2019 - Updated PAYE BRS for Employer Reconciliation (2019 release) version 18.05 was published.


Business Requirement Specifications (BRS) and timelines

​Business Requirement Specification
​       Year Applicable​                 Submission dates*​                       

​​BRS - PAYE Employer Reconciliation for 2020 /2021

​​2021 Annual Employer Reconciliation
(1 March 2020 - 28 February 2021)
Interim: 14 Sep – 31 Oct 2020
Annual: 15 Apr – 31 May 2021
BRS - PAYE Employer Reconciliation for 2019 / 2020 ​2020 Annual Employer Reconciliation
(1 March 2019 - 28 February 2020)
Interim: 23 Sep – 31 Oct 2019
Annual: 15 Apr – 31 May 2020
BRS - PAYE Employer Reconciliation for 2018 / 2019 ​2019 Annual Employer Reconciliation
(1 March 2018 - 28 February 2019)
Interim: 17 Sep - 31 Oct 2018
Annual: 1 Apr - 31 May 2019
BRS - PAYE Employer Reconciliation for 2017 / 2018 ​2018 Annual Employer Reconciliation
(1 March 2017 - 28 February 2018)
Interim: 15 Sep - 31 Oct 2017
Annual: 1 Apr - 31 May 2018 
 
BRS - PAYE Employer Reconciliation for 2016 /2017​  2017 Annual Employer Reconciliation
(1 March 2016 – 28 February 2017)
Interim: 12 Sep - 31 Oct 2016
Annual: 1 Apr - 31 May 2017

* The final submission periods are subject to business requirements / readiness and calendar working day dates. Final confirmation will be communicated at the time of the relevant submission period. 


What is PAYE?

Employees’ Tax refers to the tax required to be deducted by an employer from an employee’s remuneration paid or payable. The process of deducting or withholding tax from remuneration as it is earned by an employee is commonly referred to as PAYE. See How to register for PAYE on eFiling.
 
An employer who is registered or required to register with SARS for PAYE and/or Skills Development Levy (SDL) purposes, is also required to register with SARS for the payment of Unemployment Insurance Fund (UIF) contributions to SARS. You can register once for all different tax types using the client information system.

Top Tip: The Employment Tax Incentive encourages employers to employ young workers by providing a tax incentive to the employers. Read more.  
 


Who is it for?

The amounts deducted or withheld must be paid by the employer to SARS on a monthly basis, by completing the Monthly Employer Declaration (EMP201). The EMP201 is a payment declaration in which the employer declares the total payment together with the allocations for PAYE, SDL, UIF and/or Employment Tax Incentive (ETI), if applicable. A unique Payment Reference Number (PRN) will be pre-populated on the EMP201, and will be used to link the actual payment with the relevant EMP201 payment declaration.

How and when should it be paid?

It must be paid within seven days after the end of the month during which the amount was deducted. If the last day for payment falls on a public holiday or weekend, the payment must be made on the last business day before the public holiday or weekend.
 
The following payment methods are available:
  • eFiling
  • Electronic payments (EFT)
  • Payments at a bank: All payments can be made at any ABSA, Capitec, FNB, Nedbank or Standard Bank branch.
  • Manual forms of payments will no longer be accepted by SARS. Cheques posted / delivered to SARS will be returned to the client.

Note: Please note that these changes exclude Customs.

Note:

Employers who pay, or are likely to pay Employees’ Tax exceeding R10 million in any 12-month period, must submit Employees’ Tax declarations and make payments electronically.
 

To access this page in different languages click on the links below:

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 Top FAQs

While downloading the latest version of the easyFile™ Employer, my anti-virus identified a virus and deleted any [email protected]™ Employer files already installed. Is there a virus on [email protected]™ Employer?
No, easyFile™ Employer is not infected by a virus. Make sure you have set your anti-virus to accept [email protected]™ Employer.

​I get a 'duplicate' status on reconciliation when there are no changes in the figures declared on the EMP501on [email protected]?
A reconciliation consists of multiple documents which can include a combination of the EMP501, IRP5/IT3(a) and EMP601. Updates made on these documents may or may not affect the figures declared on the EMP501.

Is it possible to increase your ETI liability or utilised amounts from what was initially declared?
No, you are not allowed to increase your ETI liability or utilised amounts from what you initially declared. This is according to legislation.

What to do if the EMP501 reconciliation was submitted for the incorrect period?
If you have submitted your 201608 EMP501 reconciliation, but you selected the 201702 period by mistake, the system will not allow you to capture and submit any EMP201 returns for the months of September 2016 to February 2017.

Will the system allow a person to claim backdated ETI in recons prior to 1 March 2017?
From 1 March 2017 the employer cannot claim backdated claims for periods prior to 1 March 2017. The last month available to the employer to make that claim was February 2017 EMP201 return.