Resubmission of EMP501 and Tax Certificates which reflect Solidarity Fund donations, by 9 July 2021

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

SARS Notice

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.

Team SimplePay

How working from home may have cut your tax bill

At SimplePay we love going the extra mile for our customers and their employees. Normally this involves making your payroll obligations a breeze, but sometimes there are aspects of income tax law that we like to highlight as they can benefit both you and your employees!

As you will be all too aware, COVID-19 triggered an exodus out of the office with many finding themselves Working From Home (WFH) for extended periods of time. With the notable exception of one’s pets, it’s fair to say that most of us have found WFH to be anything but smooth sailing. Video meetings, choppy internet connection, the forbidden L word (thanks Eskom)… It hasn’t always been a walk in the park. 

There is one positive result of this though and it comes in the form of a tax deduction for certain home office expenses. Provided you meet the requirements laid out below, the various costs that you’ve incurred running a home office could be deducted when you submit your individual tax return (ITR12) next month. 

(The below is intended purely for informational purposes to highlight the existence of this deduction – for any queries around eligibility, claiming etc, please contact SARS directly).

What are the qualification requirements?

There are four key elements to be eligible to claim home office expenses:

  1. The part of your home connected to the claim must be occupied for the purpose of trade.

Put simply, you need to have an allocated area in your home from which you work.

  1. The part of your home needs to be specifically equipped and regularly and exclusively used for the purpose of trade.

Specifically equipped” simply means that you have the equipment needed for you to carry out your role. Clearly this is subjective; the equipment required by a software developer is not the same as that required by a carpenter. Practically this could mean as little as a laptop, chair, table and internet connection.

Regularly” is again subjective, but a SARS interpretation note highlights that there needs to be a certain frequency of working that once a week is unlikely to meet.

Exclusively” indicates that the part of your home used to work must be exclusively used for that purpose. As soon as there is mixed business and private use, this requirement isn’t met. There is no hard and fast rule on exclusive use currently, so you will need to make a judgement call on whether you’ve satisfied this requirement. If you’re at all unsure, it’s always best to contact SARS directly – their call centre is very helpful!

  1. You need to work at home for at least 6 months of the tax year.

For salary-based employees to claim, at least 50% of their working time must be spent working from home. So, if you moved to remote working after the first lockdown in March 2020 and didn’t return to the office before October 2020 you’ve most likely met this requirement!

  1. Your employer must have granted you permission to work from home.

This could be as simple as a letter from your employer confirming that they required you to work from home and explaining to what extent.

What might you be able to claim?

Once you qualify,  some of the key items you might be able to claim expenses for are:

  • A portion of the cost of your rent / your bond’s interest*
  • Rates and taxes for the property*
  • Repair / renovation costs*
  • Maintenance costs for the home office e.g. cleaning
  • Wear and tear allowances on stationery and office equipment used for the purpose of trade.

*You can claim the cost of rent / interest on your bond, repair / renovation costs and rates and taxes in proportion with the percentage of your home occupied as a home office. 

SARS has stated  that estimates will not be permitted and you must be in a position to prove the floor area of both your premises and the home office, if requested. They have not elaborated on what they will require as evidence, but this clearly makes it very important to be as precise as possible for the proportion you claim.

FYI: employees who earn more than 50% of their gross income through commission can deduct further expenses, but for simplicity’s sake this information has not been included. If you would like more information on this, please call SARS or visit their webpage.

Ok I’m satisfied I qualify, how can I claim?

Individual filing season opened on 1 July 2021 and runs until 23 November 2021. As long as your employer has completed their employer filing return, your ITR12 should be pre-populated with the relevant information from the IRP5.

You can claim your home office expenses on your individual tax return (ITR12). In claiming the expenses you will need to make sure:

  • You meet the requirements laid out above.
  • You have recorded the expenses that you’ve incurred by running your home office (there is no prescribed format, you just need to provide the information in a clear way, like a spreadsheet). 
  • You have retained bills and receipts to evidence your expenditure, in case this is requested by SARS (these should be retained for 5 years).

When completing your individual ITR12 you simply need to claim the amount under the deductions sections and upload your relevant supporting documents when prompted.

Once you’ve done this, you can file your return and that’s it! It’s then over to SARS to review your return and pay across the amounts due to you. As always, if you’re at all unsure about whether you qualify, how to complete the forms etc, please get in touch with the SARS call centre for guidance.

We hope that this information has proved useful to you. As this information is relevant to a larger than normal proportion of people this filing season, we encourage you to share this post with your employees, colleagues, friends and family, so that everyone can benefit!

 If you have any questions on the above information you can contact SARS on 0800 00 7277. 

Equally, if you are not yet a client of SimplePay but would like to be, why not check out our website? Or, better yet, try out our service for free with our 30-day trial, get acquainted with our user-friendly service by reading our getting started page, or take our free online course

Keep well and stay safe 

Team SimplePay

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

Huge ETI Update and Improvements

Managing Employment Tax Incentive (ETI) claims can be difficult and time-consuming. However, it can also be highly beneficial for many employers and is well worth taking advantage of where you can.

Over the years we’ve taken note of the difficulties faced by our clients and have used this feedback to improve our system and your experience. Our team has been hard at work to deliver a massive ETI update, which will greatly improve and simplify your ability to correctly claim ETI and includes the following changes:

Backdating: You can now set an effective date for an employee’s ETI that’s in the past. You can also do the same for other ETI settings, like minimum wage. This allows you to update your ETI setup so that your ETI on SimplePay matches your records ensuring that your current claims are correct. In some cases, it may even result in further claims for ETI.

More effective handling of under-claims: SARS has specific rules for how ETI under-claims should be handled. More info can be found on our help site, but in short, you are only allowed to claim for ETI that you under-claimed in the current bi-annual filing period. For example, we are currently in the 1 March to 31 August bi-annual filing period, therefore under-claims for periods before 1 March will be forfeited. Any under-claims for the current bi-annual filing period have to be claimed in the current month if the ETI is for a month whose EMP201 deadline has already passed. The system will now assist you in remaining compliant with this and with making these claims.

Better auditing: Seeing ETI values change on your EMP201s has often been a cause of confusion for our clients. Going forward, the system will allow you to track the source of such changes, providing a clearer audit trail and helping remove some of the stress and confusion around ETI.

Stay in sync with employee information: When correcting a setup error which impacts ETI, (such as changing an employee’s date of birth), you now have the ability to recalculate historic ETI immediately. This functionality gives you the ability to claim historic errors immediately, rather than having to wait until bi-annual filing. As always, we advise clients to be very cautious when entering information used for calculating ETI.

The following help articles provide more information on ETI and how it works (including the changes mentioned above):

Reminder:

It’s important to note that the August EMP201 is the last time you’ll be able to claim ETI under-claimed for the period March 2020 to July 2020. Any ETI for the current bi-annual filing period that was not claimed will have to be forfeited after the August EMP201.

Want to claim ETI but don’t have the right payroll software to help you? 

SimplePay clients love having a hassle-free payroll experience that keeps them compliant and keeps up to date with changes in the payroll landscape. Not convinced? We offer a 30 day free trial that lets you see just how easy payroll can be. You can find out more and sign up here.

Team SimplePay

July Recap Blog

With yet another month in 2020 having come to an end, it is time to recap on the month of July and look ahead to what August has to offer!

COVID-19 TERS Extension

Update 4 August: The cut-off point for April and May TERS applications has been extended and closure will be subject to 14 day’s notice – Read more here.

As was covered in our blog on 21 July 2020, deputy Minister Moloi announced the extension of COVID-19 TERS to 15 August, aligning this with the extension to the Disaster Management Act. 

Applications for April and May close today, 31 July 2020, but we are still waiting for an announcement on the opening of applications for July.

Please also note that as previously mentioned the home page of the TERS application portal has been altered. A new message outlining urgent steps for the employer to take, in order for the UIF to be able to authorise payment of an application. Please take a look in case any action on your part is required for claims already submitted.

Use of the Reduced Working Time Category to Claim Benefits

The UIF has stated that there has been a dramatic increase in the number of applications for UIF under the reduced working time benefits code. This shows that a significant number of employees are likely receiving financial support through their accrued UIF benefits of receiving these through TERS. The UIF and Department of Labour have reiterated that TERS is the better option for employees as long as it remains in force.

In our blog about the time spans of the different COVID-19 support measures, we detailed the need to move employees across to UIF benefits upon the conclusion of the TERS scheme. With the abovementioned extension to TERS, switching employees should be delayed until at least 15 August 2020.

SARS Auto-Assessment Process

As mentioned in our previous blog from 7 July, SARS is rolling out a new, streamlined individual tax return service in August. Rather than having to manually complete your individual tax return, it may be automatically assessed if you meet SARS’ conditions. The new service will be run throughout the month of August and provided SARS has all the necessary tax information they need (IRP5 etc.) you and your employees will receive an SMS inviting you to review your statement and accept it if you are in agreement with it.

For more information on the scheme and an FAQ you can visit the SARS Auto-Assessment page.

Steps to Follow

  1. Log into eFiling or the SARS MobiApp.
  2. Click on “Tax Returns” 
  3. A pop up will appear stating “SARS has simulated a tax return for you. Click “Continue”.
  4. Once the ITR12 has loaded you can either select “Accept” or “Edit Return”.

If you have selected accept, you will be redirected to a list of your submitted ITR12s, or alternatively if you wish to edit your ITR12 you can do so.

If you have accepted the tax return SARS should issue you with an ITA34 Notice of Assessment. After you have received this that’s it, you’re done!

SARS has also provided video guides which you can find here.

Bi-Annual Tax Period

The end of August marks the halfway point through the tax year, meaning that soon after it will be time to start preparing for interim filing. Due to SimplePay’s continuing commitment to make your payroll life straightforward, we will endeavour to make sure that we have completed all necessary preparations and testing for when the interim biannual filing opens.

We hope that you have found the above information useful. 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

New Feature: EMP201 Breakdowns and Variances

If you’re managing a business or department, you know the importance of tracking variances and maintaining an audit trail. Similarly, if you manage the submissions to SARS, it is important to be able to track any changes to your payroll which impact your submission and resubmit if necessary. What if there was a way to make these easier? Well now there is! Introducing the expanded EMP201 web view.

In a previous blog post, we introduced the ETI breakdown, accessible from the EMP201 web view. We have now applied the same concept to other areas of the EMP201, with breakdowns available for PAYE, SDL and UIF. 

Each breakdown shows a list of your employees and the total PAYE, SDL or UIF calculated for each employee. 

Remember, you can view the PAYE, SDL and UIF trace for each employee by going to their profile (announced in this blog post).

We have also created a variance feature for months where more than one EMP201 has been generated. Remember, if you make changes to your payslips after your EMP201 is finalised, a new EMP201 is generated so that you have a clear audit trail for resubmitting to SARS if needed. The breakdowns for any updated EMP201s now also show the differences between the PAYE, SDL, UIF and SDL in the updated EMP201 compared to the previous EMP201. The differences are shown per employee and the total difference is shown at the bottom of the breakdown.

We hope you love this new functionality and the benefits that it provides.

Need more information? The following help articles may be useful:

Not a SimplePay client? The EMP201 form and all functionality covered in this blog post and on our help site are only available to SimplePay clients. The good news is that we offer a 30 day free trial and sign up is a breeze! You can find out more and sign up for a trial here. Come and experience the joy of stress-free payroll.

Team SimplePay

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

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