As part of our continued effort to always keep you compliant and signal potential issues which may affect your business, we noted a recent issue which warrants this blog post.
The information in this post is aimed at employers who may have facilitated donations by employees to the Solidarity Fund, between 1 April and 30 September 2020, via their payroll.
Last week SARS released updated software to enable the filing season of individuals and trusts that commenced on 1 July 2021.
As part of the testing cycle during the release, it was discovered that [email protected] incorrectly processed EMP501 source code 4055 data, which relates to employee donations to the Solidarity Fund through their respective payroll systems.
SARS has apologised for the error and will be taking steps to have the issue resolved and the errors corrected.
Resubmission of EMP501 data
To address the issue, it will be required that affected employers resubmit their EMP501 data to SARS. Resubmitting the data is the only way that SARS will be able to recognise the donations by employees for tax purposes during the upcoming filing season. It is essential that donations to the Solidarity Fund are reported on the tax certificate against code 4055.
SARS has urged all affected employers to resubmit by Friday 9 July 2021 to enable them to process the data successfully.
If you have any queries about this or are unsure if you are affected, please call the SARS Contact Centre on 0800 00 7277.
Should you have any questions regarding SimplePay or any of our services, please feel free to contact [email protected] for assistance.
There are several organisations outside of government, such as the South African Future Trust (SAFT), providing COVID-19 relief funds for employers to keep paying their employees. The relief is usually offered in the form of a loan to employers and is paid directly to employees. To assist with the special tax treatment and reporting requirements for these payments (see below), SimplePay has created a new system item: COVID-19 Disaster Relief.
As outlined by the Disaster Tax Relief Bill, these payments are not included in remuneration for PAYE, SDL and UIF and therefore are not subject to tax. Although these payments are not included in remuneration for PAYE, SDL and UIF, they are included in remuneration for the purposes of calculating ETI.
Reporting on Tax Certificates
SARS has created a new tax code, 3724, for reporting these payments on IRP5s/IT3(a)s. This is outlined on the SARS website here.
Using the COVID-19 Disaster Relief System Item
To make use of the new system item created by SimplePay:
- Go to an employee’s profile
- Click on Add next to Payslip Inputs
- Under Other, select COVID-19 Disaster Relief
- Enter the Amount of the relief paid to the employee
- Click Save
You will notice that the payment is listed on the payslip as a Benefit and does not impact the Nett pay payable to employees. This is because the relief payments are made directly to employees by the organisation. The system item is simply used for satisfying the tax and reporting requirements and not to facilitate payments.
These details are also outlined in our help page here.
Should you need further assistance, please contact our support team.
As of the 2018/2019 tax year, the treatment of travel allowances where employees are reimbursed per kilometre travelled for business has changed.
Previously, the travel allowance was not taxable on the payslip, irrespective of the amount per kilometre reimbursed. However, the travel allowance may have been taxed on assessment.
From 1 March 2018, if an employee is reimbursed at a rate above the prescribed rate, the portion above the prescribed rate is taxable on the payslip. The prescribed rate for the 2019 tax year is R3.61 per kilometre.
There are no changes to the way that you capture the reimbursement on a payslip on SimplePay. We aim to keep you compliant with SARS and therefore SimplePay has been updated to take these rules into account. The system will automatically split the travel allowance into the taxable and non-taxable portion, based on your inputs.
Please note that due to this change, the reporting codes for reimbursive travel allowances used on the IRP5 have also been updated by SARS.
For more information on this, refer to the following help page.