If a company is registered for PAYE, it has to submit a PAYE recon every 6 months. The purpose of a PAYE recon is to make sure that all the PAYE, i.e employee tax deducted from employees were paid over to SARS. The PAYE recon includes the period from 1 March 2022 to 31 August 2022.
What is the deadline?
The deadline for the PAYE recon to be submitted at SARS is 31 August 2022.
Get your PAYE recon submitted now!!
Just submit the form below, and we will contact you ASAP.
The deadline to submit your PAYE recon, aslso known as the EMP501 is 31 May 2022.
What is a PAYE recon?
This is the process where the amount of PAYE deducted monthly and paid over to SARS is reconciled. This is to ensure that all the amounts deducted from employees is paid over to SARS.
During this process, when the EMP501 is submitted, IRP5 certificates have to be issued for every employee. These certificates then have to be issued to every employee.
What information does the IRP5 certificate need to contain?
The certificate needs to contain all income the employee has received. This includes the salary, all other benefits and contributions made by the employer. It also need to contain all deductions made by the employer towards pension funds, retirement funds and medical aids. Also, it needs to show the amounts deducted for PAYE, SDL and UIF. The IRP5 certificate also needs to show the number of months which the employee has worked. Read more about EMP501.
It is very important to submit this recon, as the employees have to use it to submit their personal income tax returns. Failing to submit the return will also attract penalties for non or late submissions.
I get asked this question quite a lot. If you have more than one income stream during a financial year, the chances are very good that you will need to pay in on your annual income tax return.
Income tax returns
SARS has written a practice note which explains this very good, and one of the best practice notes they have written. Please see the SARS website to read this note. This will give you more insight on how PAYE is calculated, and how it is influenced when a taxpayer have more than one income. Contact us for more info.
Employers have to submit their annual PAYE recons, also known as the EMP501 before 31 May 2021. This applies to all employers who
This is applicable to all employers who are registered for PAYE and deduct employee tax from their employees on a monthly basis. After the recon is submitted, IRP5 certificates will be generated for all employees. These certificates have to be handed over to the employees in order for them to submit their annual income tax return to SARS.
Failure to submit the PAYE recon will result in a penalty of 1% of the annual PAYE liability of the company.
A lot of people are currently starting companies at the moment due to job losses and seeking alternative income. Unfortunately, these business owners are never advised on what steps to take next i.t.o staying compliant at SARS and other state institutions. Below is a bit of a break down of what needs to be done and which returns need to be submitted.
The first thing you should do is open a bank account for the business. Without one, you will not be able to register for any tax types, or register on the central supplier database.
The company will be liable for tax from the day it is registered. After the end of each financial year, a set of financial statements will have to be compiled. These information on these financial statements will be used to submit the tax return of the company.
During the year, all companies have to submit 2 provisional tax returns based on the figures of the current financial year. The first one is 6 months into the year and the second 12 months. So for company with a February year end, it will be August and February.
As soon as one of your employees earn more than R6 918(for the 2021 financial year), you will have to register at SARS for employee tax. Or PAYE as it is known. You will have to deduct PAYE on a monthly basis from the employee and pay it over to SARS before the 7th of the following month. This also means that you will have to provide all employees who tax are deducted from with an IRP5 certificate on an annual basis.
Once a company has a turnover of more than R1 million for a 12month period, they have to register for VAT. There is also an option for companies to voluntarily register if their turnover is less. The VAT is then calculated every second month and paid over to SARS. A lot of customers and suppliers prefer to do business with companies who are VAT registered. You will also need to be VAT registered in order to apply for tenders or contracts.
CIPC – Annual returns
All ompanies have to submit an annual return to CIPC every year. Click here for more information.
The monthly PAYE return is called a EMP201. The following amounts are to completed on this return, namely PAYE, SDL and UIF. The amounts are the amounts that are deducted from employees’ salaries. The SARS PAYE tables can be seen here. A 10% penalty is raised by SARS for the late submission of this recon.
SDL, or skills development levy is payable when the company’s total payroll exceeds R500 000 per annum. The amount to be contributed is 1% of the employees salary. This amount is contributed by the employer and not deducted from the salary.
UIF is dedcuted at 1% from the employees salary. But the amount deducted should not exceed R148.72. The employer then has to contribute an equal amount of 1% of the employee’s salary not exceeding R148.72. This amount is then paid over to SARS, who in turn pays it over to the department of labour.
The EMP501 is called the PAYE recon. This recon should be done twice a year. The first one is 6 months after the beginning of the financial year. The second one is done 12 moths into the financial year, thus it will include the salaries for the full financial year. The purpose of the recon is to ensure that the amount of PAYE, UIF and SDL that was deducted monthly from PAYE corresponds with the amounts paid over to SARS.
IRP5 / IT3
Employees who earn enough to have PAYE deducted receives an IRP5. Employees who only have UIF deducted receives an IT3. These certificates are generated when the second PAYE recon for the year is done, and should then be handed over to all employees when the EMP501 has been submitted. No certificates are generated when the first EMP501 is submitted.
The PAYE recon is done via Easyfile, software that was developed by SARS especially for this. The detail can be entered manually or via an electronic file created by payroll software. If payroll software is used by the company.