Pay As You Earn

What’s New? 

• 13 July 2021 – Introduction of penalties for PAYE

The penalty for late filing of a Pay-As-You-Earn (PAYE) reconciliation was introduced for the first time this year.  However, we are still in the process of enhancing our Dispute Resolution process so that this penalty can be disputed separately from a PAYE late payment penalty.

In the event that you receive another PAYE penalty for the same tax period, you will not yet be able to do a Request for Remission or lodge an Objection against the added penalty on eFiling when your prior Request for Remission or Dispute has already been finalised.

Our enhancements to the Dispute Resolution process should be ready soon, but in the event that you wish to do a Request for Remission or Dispute in relation to such an added penalty, SARS will as an interim measure accept a written Request for Remission or ADR1/ADR2  forms in relation to the added PAYE penalty.  

To make use of the interim process to submit a Request for Remission, Notice of Objection or Notice of Appeal, please follow these steps:

Step 1

Check on eFiling that the penalty amount for which you wish to request remission, object or appeal against is indeed blocked from being submitted.  If eFiling blocks you then proceed to Step 2.

Step 2

Type or write a Request for Remission, and make sure that you include the reason for your request as well as the PAYE reconciliation period or transaction numbers of the penalties incurred or the EMP201 periods.  Before you do all of this please visit the Request for Remission of Administrative Non-compliance penalty webpage to understand the legislative requirements.

If you already submitted a Request for Remission but you remain aggrieved by the outcome then use the ADR1 form in the case of an objection.  If you already objected and the objection was dismissed, and you wish to appeal, then use the ADR2 form.  The ADR1 and ADR2 forms can be downloaded here https://www.sars.gov.za/find-a-form/.

Step 3

Submit your Request for Remission, ADR1 or ADR2 to [email protected] or [email protected]. You will receive a case number which must be used in any future correspondence with SARS relating to this matter.

Step 4

Once we have considered the request for remission, objection or appeal, SARS will notify you by way of a letter addressed to your preferred channel of communication.

• 30 June 2021 – [email protected] version 7.1.4 was released
• 28 June 2021 – [email protected] version 7.1.3 was released
• 8 June 2021 – Updated PAYE BRS Employer Reconciliation version 20.0.1
• 7 June 2021 – [email protected] version 7.1.2 was released
  
• 1 June 2021 – Employers Filing season is now closed. It was open from 1 April to 31 May 2021. You may still submit, but please note that penalties may apply.
• 19 May 2021 – Watch our YouTube video on the consequences of non-compliance for PAYE tax by clicking on the image below:
  
• 6 May 2021 – Updated PAYE BRS Employer Reconciliation version 20.0
• 6 May 2021 – [email protected] version 7.1.1 was released
• 15 March 2021 – Employer Annual Reconciliation: 1 April 2021 to 31 May 2021

  SARS constantly strives to improve its service offering to taxpayers. Changes introduced to SARS’ systems are a vital part of our vision to have a more accurate reconciliation process.  Correct information submitted on time to SARS leads to a seamless tax experience for both employees and employers. For more information, please read the letter to our stakeholders.

• 8 March 2021 – Preparation for annual Employers Filing Season

  SARS calls on employers to ensure that they are ready to submit their annual reconciliation declarations with the latest and most accurate payroll information about their employees and the tax they have deducted.

  The data that must be submitted to SARS from employers should cover the Monthly Employer Declarations submitted, payments made and Tax Certificates (IRP5/IT3) (a)s generated, covering the full tax year from 1 March 2020 to 28 February 2021.

  Employers have from 1 April 2021 to 31 May 2021 to submit their data to SARS.

• 15 December 2020 – [email protected] version 7.1.0 was released
• 11 December 2020 – Updated PAYE BRS Employer Reconciliation version 19.5

  The correct validation for information code 4587 – Section 10(1)(o)(ii) exemption taken into account by the employer for PAYE purposes has been reinstated. In addition, the validation of source code 4102 – PAYE has been updated to be clear and concise.

• 5 October 2020 – [email protected] version 7.0.9 was released
  • 18 September 2020 – [email protected] version 7.0.8 was released
  • 11 September 2020 – [email protected] version 7.0.7 was released
  • 24 June 2020 – [email protected] version 7.0.6 was released
• Covid-19 PAYE Deferral Relief: Payment of Deferred Amounts 
  
  Affected employers were advised on 6 October 2020 that they 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. Separate payments via eFiling were required for September 2020 which were due on 7 October 2020.

  The EMP201 payment function via eFiling has now been amended and employers will be able to submit a single payment via eFiling in respect of their monthly EMP201 declaration payment and the Covid-19 PAYE Deferred Relief payment with immediate effect. Employers will be able to increase the EMP201 declaration payment amount on eFiling to include the Covid-19 PAYE Deferred Relief Amount payable in respect of the relevant month. 

• 6 October 2020 – Covid-19 PAYE Deferral Relief: Payment of Deferred Amounts [Refer to the above 26 October 2020 notice]

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:

  • Disaster Management Tax Relief Bill [B 11B—2020]
  • Disaster Management Tax Relief Administration Bill [B 12B—2020]
• 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