Employers are required to submit their annual reconciliation declarations (EMP501) that reflect accurate and the latest payroll information about their employees, monthly employer declarations  (EMP201) for PAYE, UIF and SDL; payments made (excluding penalties and interest paid); and employee tax certificates (IRP5/IT3(a)s generated, covering the full tax year from 1 March 2022 to 28 February 2023.

To make it easier for you to reconcile, easily and conveniently we would like to draw your attention to essential information that you need to know: 

• Before submitting the annual EMP501 for 2023, employers must submit all outstanding monthly declarations (EMP201) and annual reconciliations (EMP501), as well as make all payments due. 
• Employers, Tax Practitioners and Payroll Administrators need to download the latest Employers e@syFile version. This can be done via SARS eFiling at www.sarsefiling.co.za
• Where employees are not registered for income tax purposes, employers must register them using Single (“Individual ITREG”) and bundle IT Registration (“Bundled ITREG”) for existing tax numbers as well as new registrations available on e@syFile™
• First-time job seekers should be directed to register for income tax via eFiling.

Accuracy and on-time filing are critical 

The employer reconciliation process is an important first step in the wider income tax reconciliation process that enables SARS to issue individuals with an auto-assessment or a pre-populated income tax return (ITR12). Therefore, incomplete, or inaccurate information will make it difficult for your employees’ ability to meet their tax obligations. 

Consequences for non-compliance. 

If an employer submits the EMP501 late, administrative penalties will be charged. The penalty will equal 1% of the year’s PAYE liability, which will increase each month by 1% point up to 10% of the year’s PAYE liability. Furthermore, an employer who, wilfully or negligently, fails to submit an EMP201 or EMP501 return to SARS is guilty of an offence and is liable, upon conviction, to a fine or imprisonment for a period of up to two years.

What constitutes a criminal offence? 

An employer is guilty of an offence and subject to a fine or imprisonment for a period not exceeding two years, where, amongst other offences, fails to: 

• Deduct employees’ tax from remuneration or pay tax to the Commissioner within the prescribed period. 
• Deliver IRP5 or IT3(a) to employees or former employees within the prescribed periods. 
• Uses employees’ tax deducted or withheld for purposes other than the payment of such amount to the Commissioner. 
• Apply for registration as an employer.

Should you require assistance in this regard please do not hesitate to contact us for professional advice in this regard.