Burden on employers becomes bigger: Filing deadlines for employers, individuals and administrative issues that will affect employers

Filing deadlines

It was stressed in the Budget Speech that the time for non-compliance in respect of submitting the EMP501 reconciliation to the South African Revenue Service (“the SARS”) is gone for good. The employers will have 60 days after the end of the tax year to finalise their IRP5 certificates and submit the EMP501 reconciliations to the SARS. If the employer does not submit the EMP501 reconciliation to the SARS in time the SARS will impose a 10% penalty on the total employees’ tax paid by the employer for the 2008/9 tax year. This is to ensure that the deadlines for the filing season for individual taxpayers are met.

If the employer does not submit the EMP501 reconciliation timeously, the employees will personally be affected by this, because the SARS will not release their tax returns. If the tax returns are not released the employees cannot submit the tax returns on the due dates and will receive a penalty for submitting their tax returns late.

The filing season for individual taxpayers and will start in July 2009. Taxpayers and trusts who file their tax returns manually must file their tax returns by no later than 18 September 2009. Taxpayers and trusts who file their tax returns electronically must file their tax returns by no later than 20 November 2009.

Administration

Currently if the employer fails to withhold employees’ tax and pay it over to the SARS, the SARS can enforce the payment of the tax amount as a “penalty”. Currently the SARS cannot charge interest on this penalty. Interest will be charged on this penalty going forward.

It is proposed that employees’ tax, provisional tax, foreign tax credits and tax calculated should be rounded to the nearest rand to simplify the income tax return process.

The employer will have to submit EMP501 reconciliations to the SARS more than once a year, which will include a reconciliation of unemployment insurance fund contributions and skills development levies.

The SARS are looking at re-instating an obligation for employers to keep records of certain of their employees’ data. The SARS used to have an IRP2 form, which recorded the employees’ full names, surnames, identity numbers, income tax number, etc, the SARS are looking to re-introduce a similar form. The employer will be required to provide this detail to the SARS.

The SARS will be permitted to provide certain non-financial information and tax reference numbers to the employers, which will assist the employers with completing the IRP5 certificates.

In term of the Financial Intelligence Centre Act (2001) it is required that third party data providers obtain taxpayers reference numbers and the SARS requires that they provide this with documents provided to the SARS.

The following accounting measures are under consideration:

· To introduce one tax reference number for all tax types, i.e. PAYE, SDL, UIF, VAT and Income Tax (companies);
· To use the same interest rate for underpayments and overpayment;
· To charge compound (interest on interest) interest instead of simple interest; and
· A revised payment allocation rule that will firstly set payments off against the oldest outstanding debt.

The SARS is also looking into registering individuals automatically.

By only having one tax reference number and registering individuals automatically, customer service and operational efficiency will improve.