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Employer Connect Issue 7 (April 2014)

Welcome to the latest edition of Employer Connect, the electronic newsletter for employers that keeps you up to date with the tax matters that affect you. This edition covers the Interim Reconciliation period, the discontinuation of the debit pull payment option and changes to banking details.

To read our newsletter below, click on each heading to expand the corresponding article.

Every year employers need to comply with the requirement to submit their Employer Annual Reconciliation. But it is not just a matter of compliance – it is also an important part of ensuring an efficient and effective tax administration for our country by paving the way for the annual tax season for individuals.

The deadline to submit your Annual Reconciliation for the period 1 March 2013 to 28 February 2014 is Friday 30 May 2014. So please submit your reconciliation early as this will give you time to resolve any issues which may arise.

Remember to use the latest version of [email protected]™ Employer available which is a free a quick, easy and accurate way to complete your declaration. You can download it from the eFiling website www.sarsefiling.co.za

Always backup your current information on your computer before installing a new version of [email protected]™ Employer, as the installation may delete your current information.

This year there are a number of changes that have been introduced into the annual reconciliation process, one of the key ones being the need to include government’s new Employment Tax Incentive (ETI).

The ETI came into effect on 1 January 2014 to encourage private sector employers to employ young work seekers by providing a tax incentive. Qualifying employers are able to claim the ETI and reduce the amount of Pay-As-You-Earn (PAYE) payable to SARS.

To see if you are a qualifying employer or employed qualifying employees visit www.sars.gov.za > Tax Types > PAYE > Employment Tax Incentive. Any amounts claimed for ETI on your Monthly Employer Declaration (EMP201) must be included in the spaces provided when completing your annual reconciliation submission.

As we have mentioned the Employment Tax incentive (ETI) came into effect on 1 January 2014 to encourage private sector employers to employ young work seekers by providing a tax incentive. Qualifying employers are able to claim the ETI and reduce the amount of Pay-As-You-Earn (PAYE) payable to SARS.

If you are a qualifying employer who has employed young work seekers under the ETI, make sure you enter the correct amounts for each month.

  • The Gross PAYE before the ETI deduction must be completed.
  • The Total actual payments after the ETI deduction must be completed.
  • The ETI details section is mandatory, if you are claiming the incentive.
  • Read all notes provided carefully, while completing the EMP501.

The ETI supporting data must only be submitted when requested by SARS.
For now, the ETI supporting data should not be included in the IRP5/IT3(a) file created by payrolls. The ETI supporting data requirements have been listed in Appendix C of the Business Requirement Specification: PAYE Employer Reconciliation (including the Employment Tax Incentive requirements).

One of the new source codes is:

ETI (4118) – The sum of the ETI amounts calculated (theoretical amounts) for the employee during the year of assessment. The value of this code cannot be a negative.

Updated source codes [IRP5/IT3(a)]

  • Code 3703 may not be reflected on an IRP5/IT3(a) together with code 3701 and/or 3702. The value of code 3703 must be included in the value of code 3702 under these circumstances.
  • Code 3802 – Use of motor vehicle acquired by employer NOT via Operating Lease (PAYE). Code 3852 MUST only be used for Foreign Service income.

The postal address information for employees has been updated to align to the new SARS structure. [IRP5/IT3(a)]
These fields must be updated before you submit your reconciliation. The requirements are listed in Appendix D of the Business Requirement Specification: PAYE Employer Reconciliation (including the Employment Tax Incentive requirements).

The Standard Industrial Classification (SIC7) code has been included
The list of the codes is available in Appendix E of the Business Requirement Specification: PAYE Employer Reconciliation (including the Employment Tax Incentive requirements).

Please note: Retirement Funds/Fund Administrators are required to submit the SIC7 codes. Code 64300 must be entered, which is the “trust, funds and similar financials entities” code. This information will be excluded for the 2015 Employer Interim Reconciliation submission.

Don’t forget: 

  • Submit your reconciliation before the deadline of 30 may 2014.
  • eFiling may be used as a submission channel where you have 20 or less IRP5/IT3(a)s to submit with your EMP501.
  • Submit complete and accurate reconciliation documents
  • The latest Business Requirements Specifications (BRS) is available on the SARS website www.sars.gov.za.

Finance Minister Pravin Gordhan has thanked employers, traders, taxpayers and other stakeholders for helping SARS to collect R899.7 billion in revenue, which is R0.7 billion above the revised estimate in the 2014 Budget.

The three main revenue contributors for 2013/14 were—

  • Personal Income Tax (PIT): total collections were R310.5 billion which were R778 million (0.3%) above the Revised Estimate in the 2014 Budget of R309.7 billion. This is 33.8 billion (12.2%) higher than the R276.7 billion outcome of the previous financial year
  • Corporate Income Tax (CIT): total collections were R179.9 billion. This is R1.2 billion (0.7%) above the Revised Estimate in the 2014 Budget of R178.7 billion. This is R19 billion (11.8%) higher than the R160.9 billion outcome of the previous financial year
  • Value Added Tax (VAT): total VAT collections were R237.7 billion. This is R1.6 billion (-0.7%) lower than the Revised Estimate in the 2014 Budget of R239.3 billion. This is R22.7 billion (10.6%) higher than the R215 billion outcome of the previous financial year.

The collection of R899.7 billion increases the tax-to-GDP ratio from 25.9% anticipated in the 2014 Budget to 26%. This improvement is still below the 27.6% of GDP in 2007/08. Because of the global financial crisis the tax-to-GDP ratio declined to 24.4 in 2009/10.

SARS introduced an enhanced TCC application process on eFiling and in SARS branches. This is the first step in the phased implementation of a modernised tax compliance process.

How it works

You apply online using our improved online system and collect the certificate at any SARS branch. Alternatively, you can apply at a SARS branch.

You will receive an instantaneous response informing you whether your application for a TCC for tenders or good standing has been approved, declined or selected for review when applying via eFiling or at a SARS branch.

This notification also provides you with immediate feedback as to why a TCC application has been declined.

Note: When you rectify a non-compliance at a SARS branch it could take up to five working days to determine your compliance. The process of issuing a TCC will begin once your compliance status is determined. In instances where taxpayers make payments by cheque to rectify any non-compliance, the consideration for a TCC will be delayed for a period of seven working days to ensure that the cheque is cleared.

Taxpayers should note that where the registered details applied on the TCC do not match with SARS’ records (e.g. the company registration number captured on the application does not match the company registration number on SARS’ records for all the tax reference numbers captured on the application), the TCC applications could be declined and will have to be re-submitted. To avoid these unnecessary delays you must ensure that your registered details are accurate and up-to-date across all the tax types you are registered for at SARS.

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