The Employer Interim Reconciliation submission season is now open and South African employers are required to comply with the Employer Reconciliation Process and send monthly employer declarations (EMP501) forms that reconcile the taxes collected from employees.
This is in accordance with the SARS modernisation process to enhance the reconciliation tax systems.
Essentially this means to leverage an automated system so that reconciliation submitted in real-time will validate the reconciliation submitted against both your IRP5/IT3(a) certificates and EMP201 submitted.
According to SARS the basic Employer Reconciliation Process has remained constant, but has been enhanced since 2008.
For example, employers can complete and send the reconciliation declarations online via eFiliing, or using e@syFile™ Employer.
Reconciliation involves matching all tax due (liabilities) with all tax paid and checking these against the total value of all tax certificates issued. These three (3) amounts should all be equal. The reconciliation process only relates to the tax paid and not additional tax, penalties or interest.
SARS advises that in instances where a credit is due that was used in settling a liability, the consumer should add this to the payment field for that particular month when finalising the reconciliation.
Despite the automated, enhanced Employer Reconciliation Process, there are instances where the recalculated monthly liabilities differ from the original declared liability amount on the EMP201s.
5 instances where differences can occur:–
- A delay in implementing the correct tax tables – possibly having resulted in and over/under-deduction of tax in the months prior to the tax tables being introduced.
- Out of fluctuations in monthly remuneration when performing final tax liability calculation for employees.
- When an employer spreads an employees’ tax on their 13th cheque over a tax year and the employee resigns before the bonus is due, there might be an over/under-deduction.
- Any administrative timing difference in updating payroll records (e.g. resignation or death of an employee which is only updated after running the payroll, resulting in an over-payment to SARS).
- If you change any data in respect of any reconciliation that has already been submitted to SARS, the certificate(s) can be amended and the EMP501 adjusted accordingly. The revised EMP501, and any revised certificates, must then be submitted to SARS.
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