SARS urges employers to file on time or face penalties

With less than three weeks to go before the deadline of Friday 3 June 2011, the South African Revenue Service (SARS) wants to urge all employers to file their annual Employer Reconciliation Declarations on time to avoid administrative penalties.

The annual Employer Tax Season, which is a vital preparatory step ahead of the Tax Season for individuals, started on Monday 4 April 2011 and is a standard feature of the annual tax cycle. To date three quarter of all employers still have to submit their payroll declarations. While this slow start of Tax Season may be attributable to the number of public holidays during April, the response by employers it is a cause for concern.

As announced by SARS last month, employers face an administrative penalty equal to 10% on the total PAYE paid for the period if:

· The employer did not submit their annual EMP501 declaration by Friday 3 June this year (An EMP501 declaration is a summary statement of the employer’s payroll for the year, containing IRP5 information from employees and what taxes the employer has deducted and paid to SARS on behalf of the employee).

· The employer submitted incorrect, incomplete or inaccurate data within the IRP5/IT3 (a) certificates.

SARS fully understands that certain employers have had difficulty in obtaining information to complete their submissions especially in respect of obtaining complete details for employees including income tax reference numbers.

In cases where the employer can show that they have made every effort to meet their obligations, SARS will be sympathetic in considering applications for remission of penalties.

The principle that SARS will follow is that the more complete the submission, the higher the proportion of the penalty likely to be remitted (on application) will be. To help employers prioritise their efforts over the next three weeks, these are the factors, in order of importance, which SARS will consider in the remission of penalties:

1. Has the employer submitted a reconciliation declaration (EMP501) and all employee tax certificates by 3 June 2011?

2. Are the employer’s monthly declarations (EMP201) and payments for the 2010/11 tax year up to date?

3. What is the employer’s compliance history? – in other words, did the employer submit declarations on time for prior declaration periods including the interim reconciliation in August/September 2010 and the annual reconciliation in May 2010?

4. How complete is the employee information provided and much effort has the employer made to provide complete employee details?

In September last year employers were required for the first time to submit bulk registration details of all their employees to SARS. SARS understands that many employers had difficulty in providing full details of their employees to SARS.

This process is being reviewed by SARS and will be enhanced. In the coming months SARS will introduce a facility for employers to register multiple employees and obtain the results using the e@syFile and eFiling application, for those employees not registered previously.

The latest version of e@syFile Employer which includes a range of enhancements to facilitate the reconciliation and declaration process can be downloaded from http://www.sarsefiling.co.za/ to ensure an efficient and effortless submission process. To help you understand what is required when completing and submitting your declaration we have also developed a range of step-by-step guides which are available on the PAYE page on http://www.sars.gov.za/.

For further information, please visit a SARS branch, call the SARS Contact Centre on 0800 00 7277 or visit http://www.sars.gov.za/