EMP501 Reconciliation to Reflect 2020 SDL Holiday

Background

As part of the government’s efforts to assist the cash flow of employers during the initial 2020 Covid-19 lockdown months, provisions were added to the Disaster Management Tax Act to relax payment of SDL to SARS for the period of 1 May 2020 to 31 August 2020 (the “affected months”).

SimplePay followed the guidelines from government, which stated that the correct way to record this payment holiday would be by replacing the 1% percentage in the SDL calculation by 0% on the monthly EMP201’s as a temporary change for the 4-month period. We also followed this change through to our bi-annual filing documents (EMP501 and tax certificates).

UPDATE 18/05/2020: PAYE “Not Assessed” Validation Error

On submission of their IRP5 / IT3(a)s, some clients have received a validation error from SARS, flagging up some or all of their employees as “not assessed”.

Without going into the details, this does not relate to whether your employees’ tax certificates will be pre-populated or not. Any certificate that can be matched to an employee will be pre-populated and will allow your employee to complete their ITR-12.

If you receive a “not assessed”, you should check that the information to which the error corresponds is correct. If it is, then you can proceed to give the certificates to your employees to allow them to file their ITR12 returns.
If you discover an error, you need to correct it and resubmit. The problem with this scenario is that your employee may have already been assessed from your initial submission. This will also result in the error code “not assessed”, as duplicate submissions trigger this validation error. If this error recurs after you resubmit, you will need to direct your affected employees to do a Request For Correction (RFC) on their ITR12s. More information on RFCs can be found on this SARS webpage.

Declaration to Reflect SDL Holiday

With filing season open, SARS have identified that some employers are submitting EMP501’s and tax certificates with SDL recorded for the relief period, when it should be nil. As a result, the reconciliation process automatically flags SDL as payable for those months and thus overdue, which then results in interest and late payment penalties being incorrectly levied against the employer.

Last week, we notified you that SARS has flagged this issue and has requested that employers double check their SDL figures when completing the reconciliation. Although we were confident that this would not be an issue for most of our customers, we chose to pass the notice on, to cater for any customers who do not make use of the filing documents generated by SimplePay (e.g. those who outsource submissions).

We apologise for any concern that this notification may have caused. Our development team have run additional tests on customer data and we would like to assure you that the SDL is recorded correctly on the EMP501 and tax certificates generated by SimplePay.

You can confirm this by opening the PDF version of your EMP501, where you’ll see the SDL values for May to August as zero under the SDL heading.

Credit for Payments Made

If, despite the correct declaration of 0%, you in fact paid the SDL to SARS for the affected months, the SDL amount paid will be indicated as an unallocated credit on your statement of account. The SDL for this period will again be declared as 0% on your 2021 EMP501 reconciliation as well as the IRP5/IT3(a) certificates.


If you have any questions on any of the information provided in this blog and how it further relates to SimplePay, you can contact us at [email protected] 

Keep well and stay safe.

Team SimplePay

Submission Channel Consistency Requested for 2021 Employers Filing Season

In a previous blog post, we discussed the opening of the 2021 employers filing season which runs from 1 April to 31 May 2021 and many employers should now have submitted or be in the process of finalising their filing for 2021.

An important point to note concerning your filing is that SARS requires that employers be consistent in the submission channel used to submit their EMP501 reconciliation and tax certificates for a particular filing period. For example, where an employer submitted their EMP501 reconciliation through SARS eFiling for the August 2020 interim submissions, the employer must not revise their first submission through SARS [email protected], or vice versa. 

Error Reports

As part of the filing process, SARS will recalculate the PAYE and SDL payable for each employee from the amounts which are reported on the submitted tax certificate. 

SARS will then compare the amounts they calculated against the PAYE and SDL amounts that are stated on that tax certificate where there are any significant differences between the two amounts, SARS will issue an error report with details of the tax certificates that have differences.

These error reports will be sent via the same channel that the employer used to submit the EMP501 and the tax certificates. For example, where an employer has submitted their EMP501 reconciliation through SARS eFiling, the error report will be sent to them via the SARS eFiling portal only and will not be accessible via other means.

Re-submission of Tax Certificates

In line with the above principle, corrections to the certificates must only be resubmitted using the same channel that was used for the initial filing.

Changing Submission Channels

You will have the option to use a different submission channel for the next filing period but must again be consistent during that filing period in making use of the same channel for any resubmissions.


If you have any questions on how the information provided in this blog relates to SimplePay, you can contact us at [email protected] 

Keep well and stay safe.

Team SimplePay

2021 Employer Annual Reconciliation Filing Season

The 2021 Employer Annual Reconciliation filing season will soon be opening on 1 April 2021. You have until 31 May 2021 to submit your Annual Reconciliation Declaration (EMP501) for the period 1 March 2020 – 28 February 2021 to SARS.

SARS has warned that late submissions will result in a penalty of 1% of total annual PAYE being levied each month after May 2021 until the EMP501 is submitted (up to a maximum of 10%). This principle will no doubt be a permanent feature for the future and we can expect it to be applied to the August 2021 mid-year tax certificate submissions too. In addition, please remember that any employer who wilfully or negligently fails to submit a return to SARS is guilty of an offence and is liable, upon conviction, to a fine or to imprisonment for a period of up to two years. This applies to EMP201’s as well as EMP501’s.

SimplePay automatically generates the IRP5s / IT3(a)s and EMP501 needed for year-end filing with SARS. These are available under the Filing section of the sidebar menu. Submissions of your EMP501 can be done via eFiling (for less than 50 employees) or the [email protected] application. You may need to update your [email protected] application to the latest version, 7.1.0. 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]

Please always check the status of submissions to ensure their EMP501 has been successfully filed at SARS.

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

Team SimplePay

Week Recap and Level 3 of Lockdown – Effect on Business

Closing off the month of May and level 4 of lockdown in style, this blog will give a brief overview of what’s been covered this week in our blogs, before turning to what businesses can expect under level 3 in June.

Week Recap

REMINDER – The deadline for the Annual Employer Reconciliation Period is this Sunday, 31 May, as detailed in our previous blog.

Upcoming ETI changes for the May EMP201 blog contents:

  • Revisions to the COVID-19 ETI legislation is being completed in time for May payroll submissions
  • Please delay in submitting for May, we shall ensure the changes are ready for 7 June and shall inform you when the changes are complete

TERS Applications for May Open blog contents:

  • Details of the application process for COVID-19 TERS applications.
  • Key changes between the TERS process for May in comparison to April

TERS: Foreign Workers Update blog contents: 

  • Details surrounding the issue(s) in making a claim for TERS benefits on behalf of foreign employees
  • Possible means of remedying the issue and prospective changes for May applications

New Functionality: Download Responses to Electronic UIF Submissions blog contents:

  • Users can now download responses from the UIF in relation to their monthly UI-19 submissions

Level 3 of Lockdown – Effect on Business

On Sunday 24 May, the President announced that the whole country will move to level 3 of lockdown on 1 June. We thought it would be handy to provide you with a blog on what this actually means for your business. Below we have summarised some of the most relevant points to note for life under level 3.

Which Businesses can now Open?

According to President Ramaphosa, as of 1 June all manufacturing, mining, construction, financial services, professional and business services, wholesalers, retailers, media services and ICT businesses can reopen.

Retailers can be fully reopened, including stores, spaza shops and informal traders. Additionally, airlines will be allowed to reopen, initially for domestic business purposes, with more air travel being phased in on announced dates.

Industries which were open under levels 4 and 5, such as agriculture, medical services and food production, will remain fully open.

In the President’s speech, he stated that the reopening will be contingent on each business creating a workplace plan. This plan must be aligned with the Government’s guidance (discussed below), as well as any protocols released by the relevant sector (if any are released). 

You can read the Government’s notice on lockdown level 3 here. The most relevant sections to this blog are sections 46 and 47. Below are a few key points from subsections of  section 46:

  • Businesses and other institutions with over 100 employees must implement measures to minimise the number of employees in the workplace at one time. Examples given include shift patterns and remote working.
  • Relevant health protocols and social distancing measures must be adhered to, including the screening of employees.
  • Construction, manufacturing, business and financial services firms with more than 500 employees must finalise appropriate sector or workplace arrangements addressing transport, staggering employee working and screening, whilst also documenting these actions.

Under section 47 of the above notice found in the PDF linked below, each business needs to designate a “COVID-19 compliance officer”. The compliance officer needs to implement the aforementioned workplace plan, as well as oversee the adherence to hygiene measures. 

Further details of the requirements of the workplace plan and compliance officer can be found in section 47, on page 14 of this linked document.

Which Businesses must Remain Closed?

Under level 3, a number of businesses must remain closed, these include:

  • Professional Care services e.g. hairdressers, beauty treatments and beauty salons
  • Restaurants, except for the provision of takeaways, drive through services and collection
  • Bars, taverns, shebeens, nightclubs and casinos
  • Hotels, lodges and other accommodation facilities (except for certain permitted guests)
  • Gyms and sports facilities
  • Exhibit and conference centres
  • Cinemas
  • Theatres
  • Museums
  • Flea Markets and bazaars

If we are made aware of any developments for the above mentioned businesses, we shall update you.

Recommendations from Government

For this new list of businesses that can return to work, the President advised that where possible, employees should work from home. Where this is not practicable workplace plans should be in place. Additionally, those deemed especially vulnerable, such as employees over 60 years old and those who suffer from underlying conditions, should ideally work from home. Failing this, the employer needs to ensure that these vulnerable employees have a safe return to work, which may include the use of special measures.

A potential problem which was identified from the reopening of the economy is the use of public transport. It was stated that all commuters must wear masks and wash their hands before and after travelling, as well as avoiding touching their faces with unwashed hands.

The full transcript of the President’s speech can be read by following this link and an infographic summarising level 3 is linked here.

Closing on a positive, to relieve the stress provided by business operations and TERS applications, you now have the opportunity to release that tension by exercising between 6am and 6pm! And on that happy note, we wish you a pleasant and relaxing  weekend.

Keep well. Stay home. 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.

Lockdown Update: 8 May

In today’s blog we have an important update on how best to interpret employee TERS benefit entitlements and the effect of additional payments by employers to employees participating under the scheme. We shall also touch base on tracking of UIF applications, updates from SARS and cast our eyes forward with respect to ETI.

TERS Payouts

Please note: This information is a reiteration of information provided by the Department of Labour on 30 April. It is provided for informational purposes only and is to the best of our knowledge correct at the time of publication.

Our previous blog based on information posted by SAICA on 29 April, suggested that employer contributions may greatly reduce the amount employees receive from the TERS benefit, as well as underestimating TERS benefit amount. The Department of Labour has since published its own FAQ document (linked below), which has shown that this was not correct. We unreservedly apologise for any inconvenience and angst this has caused you.

The following information is based on the Department of Labour FAQ (referenced as the DoL FAQ going forward), published 30 April 2020.

The amount that will be provided to each employee ranges between a minimum of R3 500.00 and a maximum of R6 638.40. This is further explained at the top of page 5 of the DoL FAQ.

Calculating an Employee’s TERS Payout

On pages 5-7 of the DoL FAQ, they explain how to calculate the TERS payout amount for an employee, before taking into account employer additions.

Benefit amount = Daily income x Income Replacement Rate (IRR)

To calculate the benefit amount, the above formula must be used. How to calculate the daily income for your employee and their own IRR, are shown on pages 5* and 6 of the DoL FAQ above. However, note that, if your employee is paid R17 712 or more, then there is no need to follow this calculation, as the entitlement will be R6 638.40.

*At the base of page 5, the term “Yi” may lead to confusion as it is a different format to the worked examples found on page 6. If at all confused, we would recommend following the method shown on page 6, using the daily income for both the amount put into the IRR formula, and for the value which you multiply with the IRR.

Effect of Additional Payments from the Employer

According to the above DoL FAQ, the correct interpretation of employer contributions is that they will not affect the employee’s benefit amount, unless the reduced salary and the TERS benefit amount would result in the employee receiving more than their normal remuneration if there were no lockdown.

For further explanation of this please refer to Page 7 of the DoL FAQ. 

Submissions of Electronic UIF Declarations

Since the lockdown came into force, there has been an influx of applications to the UIF, which has caused a delay on their end.

To help inform you on the progress of your application when using the SimplePay UIF Declaration function, we have updated our system to give you an expected time period for reply from the UIF when:

  1. You make the submission on the SimplePay Website.
  2. When your submission appears in the UIF list as awaiting_response.

When you go to your submission, under the “Electronic Status” heading, you will see a question mark in a blue circle. Hover your cursor over the question mark to show the expected response time, based on the up to date average processing times.

SARS Updates

For all the latest information from SARS, we would suggest following them on twitter (@sarstax). They are releasing nice bite-sized tweets on the various COVID-19 support measures, providing seemingly straightforward guidance for employers.

Annual Employer Reconciliation Period

SARS has not announced an extension to the annual employer filing period, meaning currently the deadline remains at 31 May. We are happy to announce that all of the necessary arrangements have been made on our end for you to proceed with your annual filing on the SimplePay site.

ETI Updates

The system has now been updated to cater for the expanded ETI, in effect from 1 April 2020 and covered in this post from 6 May. We would like to thank all of you who held off on doing April EMP201 submissions while we made the necessary updates.

The new draft Disaster Management Bills propose a further widening of ETI by relaxing the requirement that employees have an employment date before 1 October 2013. As this is still in draft form, we will not be making further system changes yet – as soon as there is confirmation of it passing into law, we will communicate this and make the necessary updates to the system – please keep an eye on our blog and in-system notifications.

We hope that this information gives clarity on the TERS payout and helps you in understanding what is a very complex subject, as well as keeping you in the loop on UIF and SARS. Should you have any queries over the content or processes to follow within this blog, please contact our support team via [email protected].

Keep well. Stay home. Stay safe.

Team SimplePay

2019 Employer Annual Reconciliation Filing Season

The 2019 Employer Annual Reconciliation filing season will soon be opening on 17 April 2019 (it is usually 1 April but has been delayed due to system upgrades at SARS). You have until 31 May 2019 to submit your Annual Reconciliation Declaration (EMP501) for the period 1 March 2018 – 28 February 2019 to SARS.

SimplePay automatically generates the IRP5s / IT3(a)s and EMP501 needed for year-end filing with SARS and these are available under the Filing section of the menu. Submissions of your EMP501 can be done via eFiling or the [email protected] application. You may need to update your [email protected] application to the latest version, 6.9.4. 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]

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

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