Government Connect Issue 23 (October 2024)

In this edition we remind you of the changes pertaining to the Employer Interim Reconciliation process which closes on 31 October. Companies registered for Company Income Tax (CIT) may no longer need to pay CIT if they have ceased trading, undergone liquidation or dissolution, or has no taxable income or assets in South Africa. Read more about the deregistration process. Take note of the Income Tax Return filing dates to ensure that you are compliant and submit your returns on time. Finally, taxpayers can learn about tax through the many workshops SARS offer.

Employer Interim Reconciliation

The Employer Interim reconciliation for the 2025 Employer Filing Season opened on 16 September 2024 and will close on 31 October 2024.

The enhancements below have been implemented for the interim Pay-As-You-Earn (PAYE) Filing Season.

- A new source code has been added to the IRP5/IT3(a) certificate:
  - Source code 3926, relating to the savings withdrawal benefit, specifically a withdrawal from a Retirement Fund’s Savings Component/Pot, was added.
- The following two source codes have been removed from the IRP5/IT3(a) certificate:
  - Source code 2039 (“Employer Contact Person Fax Number”); and
  - Source code 3137 (“Employee Fax Number”).
- Enhancements have been made to the financial fields on the IRP5 certificate: A warning message will be displayed if all digits of a financial field are the same, e.g., 4444.00.
- Updates to the employer statement of account:
  - The employer statement of account has been enhanced to display the status of payroll taxes.
  - The statement will now include the Employment Tax Incentive (ETI) account balance.
- Enhancements to the EMP501 Reconciliation process:
  - The directive validation module has been enhanced to allow the validation of multiple source codes for one directive number.
  - The employer will be prevented from requesting EMP501 reconciliation prior to the Interim Filing Season start date. For example, if the employer requests an interim EMP501 reconciliation on 20 August 2024 and the start date is 16 September 2024, the request will be rejected.
  - The employer will also be prevented from submitting the saved interim EMP501 reconciliation on eFiling if the final EMP501 reconciliation has already been submitted.
  - Notification will be issued where an IT3(a) certificate with an Income Tax reference number is submitted and PAYE should have been deducted.
- Enhancements to the employer deregistration process:
  - Where amendments were made to an EMP501 reconciliation that is in the Excessive Liability Change process, deregistration of payroll taxes will not automatically be re-instated.
  - The coding date of de-registration will always be later than the processed date of the last return and will not be considered if the Revised Declaration is submitted.
- Enhancements to the ETI account: the ETI refund and forfeit process has been enhanced.

The e@syFile™ Employer application has been upgraded. The new employer e@syFile™ offers improved performance, which includes the following features:

- The prioritisation of easier navigation and data capturing with a new look-and-feel and arrangement functions and workflows.
- Full installations with every software update.
- The introduction of quick links to related functionalities to remove the need to continuously navigate through multiple menu items.
- An enhanced user maintenance functionality to add and remove users and restrict functionality.

Employers can update the old e@syFile™ while still installing the new version, rather than uninstalling the old version. Both versions can operate on the same PC. For the bi-annual submission, version of e@syFile™ Employer can be used to submit the reconciliation. However, for the annual Filing Season, only submissions via the new version of e@syFile™ Employer will be accepted.

For more information, see the Frequently Asked Questions on the e@syFile webpage .

The following guides have been updated:

Please access Pay As You Earn | South African Revenue Service (sars.gov.za) for updates on PAYE.

Company Income Tax deregistration process at SARS

Companies that are registered or generating profits or income in South Africa are subject to Company Income Tax (CIT). They must register for it with SARS, file annual and provisional tax returns, and pay their CIT liability on time to avoid penalties and interest charges.

However, a registered company may no longer need to pay CIT if it has ceased trading, undergone liquidation or dissolution, or has no taxable income or assets in South Africa. In these cases, the company can apply for deregistration from CIT with SARS and stop receiving CIT compliance obligation reminders.

Applying for CIT deregistration from SARS

The company must ensure that it has filed all its previous tax returns and paid all its tax liabilities before applying for CIT deregistration. If the company has any outstanding tax obligations, it must contact SARS to arrange a settlement or dispute resolution. Before approving the application, SARS may also conduct an audit of or verify the company’s affairs.

To be deregistered, the company must prove that it meets one of the following criteria:

It has ceased to trade or carry on any business activity in South Africa;
It has been liquidated or dissolved by a court order or voluntary resolution;
It has no taxable income or assets in South Africa and does not intend to derive any in the future; or
It is a dormant company that has not traded for at least three consecutive years and has no intention of trading in the future.

It must also submit supporting documents, which may include:

A letter from the company’s Board of Directors or a resolution stating the reasons for applying for CIT deregistration;
A copy of the company’s final financial statements or audited accounts;
A copy of the company’s liquidation or dissolution notice or certificate;
A declaration of assets and liabilities of the company;
A confirmation of the company’s bank account closure or balance; and/or
Proof of payment of any outstanding tax debts or penalties.

The company can submit the application and supporting documents online via eFiling, email, or at a SARS branch. Upon processing and approval of the application, SARS will issue a confirmation letter to the company and deactivate its tax reference number. The company will then no longer be liable for CIT or have any related compliance obligations. However, it must keep its records for at least five years after deregistration in case of any queries from or audits by SARS.

Employer deregistration at SARS

An employer who has ceased to operate or employ must apply for company deregistration to avoid further compliance obligations.
The employer must submit an EMP123 form and supporting documents to SARS.
The employer must pay any outstanding tax debts or penalties before they can be deregistered.
The employer will receive a confirmation letter, and their tax reference number will be deactivated.

Income Tax return filing dates

Please note the Income Tax return filing dates for the 2024 Filing Season:

Individual taxpayers (non-provisional): 15 July 2024 to 21 October 2024
Provisional taxpayers: 15 July 2024 to 20 January 2025
Trusts: 16 September 2024 to 20 January 2025

How can taxpayers learn about taxes?

SARS conducts workshops to hep taxpayers understand their tax obligations. See How do I learn about taxes? | South African Revenue Service (sars.gov.za) for details of such workshops happening in October.

The step-by-step videos provide useful information about how taxpayers can use the SARS digital channels and solve difficulties that they may encounter when attempting to meet their tax obligations: Step-by-step videos | South African Revenue Service (sars.gov.za).

Employer Interim Reconciliation

Company Income Tax deregistration process at SARS

Income Tax return filing dates

How can taxpayers learn about taxes?

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