Update: New Individual Tax Returns Process

Individual Tax Returns

Back in May we sent out a blog reminding you of the annual employer reconciliation deadline, but also informing you of a delay to the deadline for your employees’ individual tax returns (ITR12s) from their expected opening date in July. This year, the window for manually entered individual tax returns opens on 1 September 2020. SARS has, however, also subsequently unveiled a new additional returns process which will be put into action over the month of August.

Under the “auto-assessment process” employees can have their returns filed and assessed without needing to complete the usual manual process through one of SARS’s channels. On 1 August, provided that individuals have had all their necessary information declared to SARS, they should receive an SMS. This will communicate an invitation to review a draft assessment on eFiling or the SARS MobiApp. If the draft assessment is correct, they can accept it, meaning that they don’t need to manually complete and file a tax return through one of SARS’s regular channels in September. Should a refund be due, it should follow within a week. The process that would need to be followed if the individual owed SARS was not mentioned. We will remain vigilant for any elaboration on this.

A further point to note is that if at the start of August, SARS have not yet received all the necessary information for an employee, but subsequently receive it during August, SARS will invite the employee to file early under the same system.

Come 1 September, if employees have not been auto-assessed, or chose to decline the draft assessment, they will be able to start the filing process via eFiling or the MobiApp. Additionally, there will be some availability for filing in branches, by prior appointment only. 

We hope that this information has proved useful to you. If you have any questions on how the information above relates to SimplePay, please feel free to contact us at [email protected]

Equally, if you are not yet a client of SimplePay but would like to be, or if you’d like to know how we can take the effort out of filing and calculating payroll, get in contact with us or visit our website: www.simplepay.co.za.

Keep well and stay safe.

Team SimplePay

Annual Employer Reconciliation Period Deadline

With 31 May just around the corner, this blog is a friendly reminder that the Annual Employer Reconciliation Period deadline is fast approaching. As mentioned in our blog on 8 May, all the necessary changes were made to the SimplePay site at the start of this month, so all that is left is to jump in and complete your IRP5/IT3(a)s!

As mentioned in this previous blog, SARS has rolled out the Employer Tax Validation system for the first time, which will cross-check SARS calculated value for the SDL and PAYE amounts, with those submitted.

Despite the pandemic, SARS has made it clear that it will not be altering its policy on late submissions, meaning that if you do submit late, you could be subject to penalties of up to 10% the value of the payroll.

We hope that this information proves useful to you. If you have any queries on how the above relates to payroll and the SimplePay system, please feel free to get in touch with our customer support team at [email protected]

Keep well. Stay home. Stay safe.

TeamSimplePay

P.S. Individual Tax Returns: 

SARS has announced a delay in the deadline for Individual Tax Returns (ITR-12s) from its normal place in July, to September 2020. The online filing period for individuals in 2020 will prospectively run between 1 September and 16 November 2020.

Submitted Files of UIF Declaration Now Available

One of the benefits of being a SimplePay user is that you can submit your UIF Declarations (UI-19 forms) directly to the Department of Labour with the click of a button. This allows you to completely bypass uFiling, making the filing process more convenient and less time consuming.

The data in the UIF Declaration is submitted to the Department of Labour in the required file format. For readability and user-friendliness purposes, SimplePay provides you with PDF and Excel versions of these UIF Declarations. We have now expanded our UIF functionality for successful submissions to include a download of the submitted file. While the format of these files may not be as useful for payroll administration, they do serve as a record of the actual file submitted, should there be any queries or disputes with the Department of Labour.

To download this file:

  1. Go to Filing
  2. Navigate to the relevant month
  3. Under the Electronic Status heading in the UIF Declaration section, the status should be “confirmed” (Note: the file is only available for successful submissions)
  4. Click on the icon next to “confirmed” to download the file

Please note: Should you need to open these files, you will need to rename the file to include “.csv” at the end (and remove the abbreviation for the current file format). This will allow you to view the file in Excel, Google Sheets or another spreadsheet application.

For more information about monthly submissions, head to our help page here.

If you require any assistance regarding this functionality, please do not hesitate to contact our support team.

Team SimplePay

Employment Tax Validation Process

In today’s blog we will be providing a brief overview of the tax validation process, carried out by SARS on the IRP5/IT3(a) certificates. Back in 2019, SARS announced its intention to validate PAYE, SDL and UIF on tax certificates. This blog therefore details the process and extent which they have put this goal into action.

As of the 2020 tax year, SARS is holding employers more accountable for ensuring that they deduct the correct PAYE. This is being done through a validation process, where SARS performs calculations on the tax certificates submitted by employers. Where SARS has determined that employers are not withholding the correct amount of PAYE, the employer will be responsible for taking corrective action. This includes recovering the amount from employees or facing the penalty of paying it on behalf of employees in cases where the employer under-deducted PAYE.

For the 2020/02/28 submission period, SARS will be validating PAYE and SDL amounts submitted.

If any discrepancies are found between SARS’ and the submitted values, a notification and accompanying file are issued to highlight any discrepancies. Employers can then review the report to determine whether the correct taxes were declared on the tax certificate, or if any amendments are required. 

Although SARS does not reject any certificates during the tax validation process, employers must ensure that taxes are correctly calculated. The SARS website states the following:

Note: The purpose of the Payroll Tax Validation letter is to inform the employer of discrepancies on the amount of tax or levies that were deducted for employees. All the certificates submitted were accepted and processed and will be pre-populated on the employee’s income tax return (ITR12).

Locating the Flagged Certificates

For details on how to locate the error report on [email protected] or eFiling and action any errors, please refer to our help page, linked here.

UIF Validation

SARS has stated that for the current filing season they will not be validating the UIF contributions, due to the fact that the value for remuneration in calculating UIF is not present on EMP201s and SARS is also not able to apply the monthly limit. This will therefore need to be double checked by employers to ensure they have the correct value.

Process to Follow for Over and Under Deductions.

The process to follow to correct any over or under deductions can be found on this SARS webpage.

In both cases, it may be necessary to amend the respective certificates. The existing certificate can be amended (i.e maintaining the certificate number), provided that there are no changes to:

  • the type of certificate (IRP5 or IT3(a); 
  • the transaction year; or
  • the year of assessment.

If any of the above does need to be amended, the original certificate must be cancelled and replaced with a new one (yielding a new certificate number).

For any amendments to your certificates, please contact us so we can assist you in doing this on the system. Along with the request, please provide:

  • The SARS tilde (~) delimited file (essentially the error report).
  • Details of the over/under deduction that has been flagged and the employee(s) which it / they relate to.
  • The CSV file from the original submission.
  • Any additional relevant information that you have, which will be of assistance.

We hope that this information proves useful to you. Upon reading the blog and the attached SARS webpage (above), if you find yourself in need of making any amendments to your certificates, please feel free to get in touch with our customer support team at [email protected]

Catch Up Corner

SDL Payment Holiday

In our previous blog about the draft Disaster Management Bills, we mentioned SDL prospectively being set to zero from the start of May until the end of August 2020. We have now implemented this change, so any payslips finalised going forward will reflect the zero SDL value on the EMP201. For employers who have already finalised their EMP201s for May, we will assist you with zeroing the SDL contributions.

Expansion of Parental Leave Benefits

It is now possible for employees taking adoption or commissioning parental leave to claim a certain amount from the UIF when on their leave period. The related SimplePay help page can be found here, with a further link on the page as to how this leave can be recorded on SimplePay.

If you have any queries on the SDL payment holiday or the leave benefits, you can contact our customer support team at [email protected]

Keep home. Stay well. Stay safe.

Team SimplePay

Interim Filing Season Now Open

The Interim Employer Reconciliation filing season with SARS is now open and ends on 31 October 2019. The interim reconciliation covers the six-month transaction period from 1 March to 31 August 2019, and the final annual reconciliation in April/May 2020 will cover the full tax year.

During the reconciliation process, you are required to submit an EMP501 return confirming or correcting the amounts declared for PAYE, SDL, UIF and ETI, as well as the payments made. This ensures that your EMP201 submissions are correct and up-to-date. In addition, failure to complete the interim reconciliation means that you will forfeit any ETI credits that have overrun in the first 6 months and will therefore not receive any payouts for this.

Remember that SimplePay automatically generates the IRP5s / IT3(a)s and EMP501 needed for bi-annual filing with SARS. SimplePay also automatically incorporates any new legislative changes, such as new codes or tax rules, simplifying the filing process for you.

The reconciliation process can be completed using [email protected] (recommended) , eFiling (for less than 50 tax certificates), or at a SARS branch (for less than 5 certificates). Version 6.9.7 of [email protected] was released today, 23 September 2019. You can download it here and read up about the changes incorporated in the latest update
here. Please remember to back up your current information on your computer before installing a new version of [email protected]

For more information about the bi-annual filing process, refer to this help page. We also have a useful guide to take you through it step by step. The guide contains an important checklist which will help you eliminate unnecessary validation errors when trying to upload files to [email protected]

If you have any queries or need any assistance, please contact our support team.

Team SimplePay

Change in Tax Rules for Bargaining Council Funds

As of 1 March 2019, all contributions made by employers to funds provided by Bargaining Councils should be treated as a fringe benefit and are therefore subject to tax. These funds include, but are not limited to sick and holiday funds for employees that belong to the Bargaining Council. Note that if the fund administered by the Bargaining Council is a retirement fund, the taxation rules for retirement funds that are effective from 1 March 2016 (and that provide for a tax deduction to reduce the taxable benefit value) are applied.

In some instances, both you (the employer) and the employee contribute to the fund. The taxable fringe benefit is equal to your contribution and should now be reported on the IRP5/IT3(a) under the following new codes:

  • 4584: Employer contributions to a Bargaining Council Fund
  • 3833: Taxable benefit iro Employer contributions to a Bargaining Council Fund

Employee-paid contributions do not impact PAYE (they are not tax deductible) and therefore are not reported.

What action do you need to take?

If you set up these contributions using a Custom Employer Contribution item, you need to update this custom item on your payroll or Bargaining Council template to a Custom Benefit item.  This will ensure that the contribution is treated as a taxable fringe benefit.

A new checkbox has been added which allows you to indicate that the Custom Benefit item is a Bargaining Council Item. This ensures that the new tax codes are applied to the custom item.

If you have many companies and need to automate this process, please get in touch with our Support team to discuss possible solutions.

If you have any further queries, please do not hesitate to contact us.

Team SimplePay

2018 Employer Annual Reconciliation Filing Season

The 2018 Employer Annual Reconciliation filing season is now open. SimplePay automatically generates the IRP5s / IT3(a)s and EMP501 needed for year-end filing with SARS and these are now available for the 2018 filing season.

You will have until 31 May 2018 to submit your Annual Reconciliation Declaration (EMP501) for 1 March 2017 – 28 February 2018 to SARS. This can be done via eFiling or the [email protected] application. You may need to update your [email protected] application to the latest version, 6.8.3. This can be done here. Please remember to back up your current information on your computer before installing a new version of [email protected]

For more information about the bi-annual filing process, refer to this help page. We also have a useful guide to take you through it step by step. The guide contains an important checklist which will help you eliminate unnecessary validation errors when trying to upload files to [email protected]

In preparation for this filing season, we have done some system updates to further simplify the process for you:

  • Pre-validation updates:

We have added additional pre-validation measures to identify data errors are before filing with SARS.

  • Consolidated IRP5s / IT3(a)s

After liaising with SARS, we have updated the way we generate tax certificates for employees who are terminated – any information on once-off payslips created after their termination date are added to the tax certificate generated for their service period if the once-off payslip date falls in the same tax year.

As always, please feel free to contact us at [email protected] if you have any questions.

Team SimplePay