April to May each year is the time that employers are given to perform their employees’ tax reconciliation. During this Employer Reconciliation process, employers are required to submit an EMP501 declaration which reconciles the taxes collected from employees with the monies paid to SARS and the total tax value of employees, income tax certificates (IRP5), for the respective period.
The Income Tax Act No. 58 of 1962, states inter alia, that employers are required to:
- deduct the correct amount of tax from employees,
- pay this amount to SARS monthly,
- reconcile these deductions and payments during the annual and the interim reconciliation, and
- issue tax certificates to employees.
To comply with the Income Tax Act, employers must submit their Monthly Employer Declarations (EMP201s) to SARS on or before the 7th of the following month.
SARS has over the past few years improved the process of reconciliations with the use of applications, such as eFiling and e@syfile. It has significantly reduced the administration required to submit the reconciliations.
The EMP501 reconciliation for the 12 months ended 28 February 2018, must be rendered on or before 31 May 2018.
Some important pointers to bear in mind:
- E@sy-File Employer software has been updated to version 6.8.3
- Employers are urged to check their PAYE banking details on the e-Filing RAV01 form.
- This will ensure that the banking details are correct in cases where an ETI refund is expected.
- If the details are incorrect, employers will need to visit a SARS branch to update it.
- Copies of all declarations submitted and related supporting documents (relevant material) must be kept for five years.
- Send your reconciliation before the deadline to avoid penalties and interest being charged.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)