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New employer tax rules on the way

May 28 2010 14:08
Ruan Jooste
Johannesburg - With effect from the 2011 tax year, all employers will have to to submit bi-annual pay-as-you-earn (Paye) reconciliations, with new disclosure requirements. The first reconciliation is expected to be due in August 2010, and the second will be due at the end of May 2011.

The new IRP5/IT3(a) disclosure requirements will affect most industries, and will initially place a significant compliance and administrative burden on employers.  

Employers will need to disclose the following information on every employees' IRP5/IT3(a) certificate, irrespective of income bracket or type of employment: income tax reference number, banking details, residential address and identity number.

"If an employer fails to disclose the above information as part of its Paye reconciliation process, the South African Revenue Service (Sars) will not accept its Paye reconciliation file," said Anthea Scholtz, tax director at Deloitte.

Make an early start to avoid penalties

"Sars will then impose a penalty on the employer, equal to 10% of the total amount of employees' tax deducted from the remuneration of employees during the tax year, for non-submission of the reconciliation form.

"The new disclosure requirement is one of the immediate issues that employers need to deal with as they may not have this information readily available at present. This will be particularly so where the employer uses casual labour, part-time staff or contractors on a regular basis."  

Scholtz said employers should start collecting the required information without delay as this could be a tricky and time-consuming process - and failure to comply might lead to hefty fines.   

"Where employees are not registered for income tax purposes and hence do not have a tax reference number, Sars plans to introduce an online registration process so that employers can register these workers," she said.  

Sars said the new disclosure requirement will help it track down any income or taxes that have fallen through the cracks.  

"It is therefore crucially important for employers to ensure that they make correct and full disclosure," said Scholtz.  




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