It’s EMP501 Madness – time for Mid-Year Employer Reconciliation Declarations

It is that time of the year… and South African employers are reminded that Employer Reconciliation Declaration (or EMP501) have to be submitted to SARS.

The EMP501 is important because it confirms or corrects the PAYE, SDL and UIF declarations as per the monthly EMP201 submitted, the payments made and the tax values of the Employee Tax Certificate and ETI, if applicable.

The EMP501 submissions have two reporting periods, the interim period (which is for the transaction period 1 March to 31 August) and annual period (which is for the full tax year 1 March to 28/29 February).

The interim reconciliation was introduced in September 2010 and has now become an integral part of the Employer Reconciliation.

But why is this significant? The interim reconciliation process is intended to assist employers by:

  • Enabling an easier and more accurate annual reconciliation submission;
  • Maintaining an up-to-date employee database;
  • Registering employees for Income Tax purposes, as required.

Employers have until 31 October to submit their interim EMP501’s and until 31 May each year to submit their annual EMP501’s

In addition to these important directives, employers should also be aware that Manually completed Payroll tax delivered or posted to a SARS branch, are no longer accepted. The only exception is for employers with a maximum of five IRP5/IT3(a)s.

It is important to remember that: –

  • SARS issues new validation rules before the start of each Employer Filing season and employers must ensure the they are always using the latest version of SARS e@syFile to ensure their submissions pass the current validations.
  • Severe penalties and interest will be charged if the Reconciliation Declaration is not submitted before the deadline and if omitted and/or incomplete information is submitted.

The reconciliation process is lengthy and time-consuming. With our knowledge and years of experience coupled with all the legislative amendments published throughout the year, CRS can save you precious time and costs by assisting you with this important part of your business as an Employer.