Accounting and Tax
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.
The deadline for the PAYE recon to be submitted at SARS is 31 August 2022.
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The deadline to submit your PAYE recon, aslso known as the EMP501 is 31 May 2022.
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.
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.
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.
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.
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The deadline to submit the first PAYE recons for the 2021 financial year is 31 October 2020.
The EMP501 is where employers have to reconcile the employee tax they deducted from employees to the amounts that were paid over to SARS. With this PAYE recon, IRP5’s are generated, but not handed over to the employees.
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