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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

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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

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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

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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

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New Feature: ETI Breakdown and ETI Trace

Despite the craziness of the COVID-19 pandemic, we continue our commitment to giving you the best payroll experience. Our team have been hard at work to bring you a web view of EMP201, an ETI breakdown and an ETI trace:

You can now see the information contained in the monthly EMP201s without opening the PDF version of the document. To do this, go to Filing > Monthly Submissions and click on Web in the EMP201 section.

The EMP201 for the month will be opened, showing you a breakdown of the EMP201 figures. You can now see more details for ETI by clicking on the amount next to ETI Calculated.

This will give you a breakdown of the ETI calculated for each employee:

You can then click on the amount next to an employee’s name to see a the ETI Trace, which shows how the ETI for that employee is calculated.

If there is no ETI calculated for the employee, the ETI trace will also show you if the employee has not been enabled for ETI, if they do not meet certain criteria, or if their earnings fell above the ETI threshold.

Pretty cool, right? We hope you love these new features.

If you have any queries regarding the new feature or the information that it contains, reach out to our Support team.

Team SimplePay

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Lockdown Recap Blog #5

Update 27 May: the UIF has announced a delay in the opening of COVID-19 TERS applications for May due to a break in the communications link between the UIF’s office and the State Informations and Technology Agency (SITA). Read the media statement here

Update 25 May: As mentioned in previous blogs, such as the Employment Tax Validation blog, SDL contributions for the months of May to August 2020 have been set to zero in line with the legislation. This will be reflected on your EMP201s and you do not need to do anything on your end.

After having a week off last Friday, we’re back to business with the consolidatory blog for the past fortnight! Without further ado, let’s get straight into what’s been covered this week.

This Week’s Blogs

As per every week, here’s the list and summary of this week’s blogs, just in case you missed them!

Annual Employer Reconciliation Period Deadline blog contents:

  • Extended deadline remains 31 May
  • Information on individual tax returns

Repo Rate Change blog contents:

  • New rate of interest cut by 50 basis points

TERS for Foreign Employees and OID Comp Return of Earnings blog contents:

  • Steps to follow to receive TERS Benefits for foreign employees
  • OID Comp Return of Earnings, delayed deadline
  • Relief measures to support employers with respect to their Return of Earnings

Submitted Files for UIF Declaration Now Available blog contents:

  • UI-19 declarations submitted through SimplePay can now be downloaded for personal records
  • Information how to open the file in spreadsheet format

UIF Submissions Update: 18/05/2020 blog contents:

  • Update on the turnaround times for UIF submissions, as well as the amount of backdating
  • Link to original update blog on 14 May.

COVID-19 TERS Update blog contents:

  • Department of Labour’s post application support document for employers who applied for TERS benefits and are looking for further guidance
  • A note for employers who are wanting to apply for TERS in May

New SARS Codes and System Item for Disaster Relief Funds blog contents:

  • Tax Treatment of disaster relief payments
  • New “COVID-19 Disaster Relief” system item on SimplePay

Employment Tax Validation Process blog contents:

  • Summary of the tax validation process
  • Process to follow for over and under deductions
  • News on SDL payment holiday
  • News on the expansion of parental leave benefits

Take-Home Highlights

Employer Annual Reconciliation Period

As mentioned in our blog published earlier today, the deadline for IRP5/IT3(a)s is 31 May, in a little over a week’s time.

We have made all the necessary changes to our system, so all that is left to do is to ensure you get your returns submitted on time!

COVID-19 TERS

It has come to the point where no blog really feels complete without a nod to COVID-19 TERS.

The situation as it stands with TERS is that applications for May have still not opened. We are periodically checking the UIF website for a change (https://uifecc.labour.gov.za/covid19/), but so far to no avail.

Hopefully the application downtime is being used wisely, whereafter a streamlined process will emerge for the remainder of the scheme.

In the meantime we are all at the mercy of Government timelines and process; unfortunately we have no insight into or influence on these, but will do our best to keep you informed as and when we know more.

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.

Team SimplePay

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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.

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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

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Requesting Income Tax Numbers from Job Seekers

SARS have requested that employers amend their hiring practices as they do not require employees to have an income tax number before starting a new job.

SARS would like to encourage all employers to use online platforms to obtain income tax numbers. It will save employees and job seekers unnecessary time at branches, ultimately allowing you to hire faster and/or get new employees working productively sooner. It will also eliminate the administrative burden of having to follow up with new employees for tax numbers and avoid delays from being given the incorrect tax number.

If you’re a SimplePay user, you can obtain the tax numbers when doing bi-annual filing with our [email protected] export file. If you need more information about how easy bi-annual filing is with SimplePay, head over to the Filing and Processes section of our help site here. Importing the file from our system into [email protected] will automatically create employees on the [email protected] system if they are new employees. Then, use the ITREG function to obtain tax numbers for employees. This is explained in a clear step-by-step guide (with screenshots) in section 5 (page 105) here.

If you need further information or assistance with this process, be sure to be in touch with our support team who are happy to help.

Team SimplePay