PAYE Season is Upon Us

PAYE Season is Upon Us

SHARE

SMEs should brace themselves for the interim PAYE reconciliation, due from 1 September to 31 October 2012. Employers are required to fully reconcile and submit their employee tax certificates and EMP501 reconciliation for the period 1 March to 31 August 2012, by the end of October 2012.

Making it easier

Employers need to make use of the new SARS e@syFile software release, e@syFile V 6.1.0., to submit their interim PAYE reconciliations. If they don’t, they will not be able to transfer their data electronically as the new software release will not recognise the old format.

It’s the law

“Companies have no choice,” says Philip Meyer, technology director of payroll and HR software developer Softline Pastel Payroll.

Legislation dictates that each and every employee in a company must be registered on the SARS database with their own tax number. Therefore, individual income tax reference numbers must be reflected in the interim PAYE reconciliation. If one or more tax certificates do not include the tax reference number, companies will receive an error notification in e@syFile and with effect from 1 September 2012, companies will be penalised.

No more medical aid deductions

“New legislation that took effect in March this year means that medical aid contributions are no longer allowed as a tax deduction for employees under the age of 65. The medical aid capped amounts have also been replaced with Medical Aid tax credits. If companies did not make use of the medical aid tax credit method, their submission will be rejected and they will be required to manually recapture the details on e@syFile”, adds Meyer.

New codes introduced

A new IT3(a) reason code for tax certificates has been introduced by SARS for non-deduction of PAYE  and must be applied on interim tax certificates. Code 08 will indicate a zero PAYE liability due to medical aid tax credits applied. There are also new source codes for fringe benefits and tax deductions that must be applied to interim tax certificates, replacing the consolidated values SARS required prior to the 2012 tax year. Most automated payroll software systems already cater for these codes.

Help is at hand

Companies can receive step-by-step assistance from a SARS Contact Centre agent with Help-You-eFile. Help-You-eFile is a new service innovation from SARS which gives companies access to SARS Contact Centre agents online.

Entrepreneur
Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.