The South African Revenue Services' new reconciliation form, known as the EMP501 declaration, came into effect at the beginning of this month.
The declaration, which all employers must complete and submit to the receiver, is another attempt by Sars to further enhance and streamline taxpayers' personal income tax returns.
The form will record the amount of tax deducted from employees, the amount paid over to Sars and the amount appearing on IRP5 certificates.
Deducted taxes on IRP5 include PAYE, UIF and the Skills Development Levy (SDL).
Tax experts have welcomed the new reconciliation form.
Robin Beale, consultant and tax specialist at PKF, formerly Fisher Hoffman, says: "We're moving towards a system similar to that in the US and other developed countries, where the onus is on taxpayers to assess their own tax liabilities."
Last year already taxpayers were not required to submit ancillary documents with their returns.
Now certain taxpayers with incomes below R120000 a year - who have a single employer and source of income and who meet certain criteria - will not have to complete and submit tax returns.
Their details and income stream will be automatically captured by the new process
Sars believes that the new system will ensure that it receives accurate information from employers, which will be used:
lTo pre-populate income tax returns for certain categories of individuals; and
lTo verify (match) information supplied by individuals on their tax returns.
In addition the information declared by employers will be used in PAYE audits of employers to verify whether the correct amount of tax was levied, deducted from employees and paid over to Sars.
Employers have a 60-day period to complete and submit the information to Sars. This year, the 60 days run from July 1 until August 29.
Sars has developed software that it will provide free of charge to assist employers to complete their reconciliation process electronically.
The software will allow the transfer of data to Sars and enable employers to generate standardised IRP5 certificates that will look similar to the new personal income tax return.
This means that the data transferred from employers will be used by Sars to generate "pre-populated" personal income tax returns.
The software is available for downloading on Sars' website or from any of its offices.
Sars says that while it will extend its services - through direct engagement and by providing automated tools and assistance to all employers who wish to comply - there will also be a far stronger focus on noncompliant companies.
Should employers not comply or meet their August 29 filing deadline, penalties, proposed to be at a rate of 10percent of the total PAYE liability, could be imposed.
But Sars maintains that for employees to obtain a pre-populated return, it will be necessary for employers to have submitted their reconciliation declaration.
So it is important that you approach your employer if you have not received your IRP5 certificate by the end of August or to check whether your employer has submitted your reconciliation information to the receiver.
What the changes mean.
lFiling period for returns opens on September 1.
lDeadline for manual submission of returns is November 21.
lDeadline for electronic submission of returns is January 23 2009.
lTaxpayers can request a return from Sars telephonically, at a Sars office or by downloading from eFiling.
lA pre-populated tax return will be issued containing taxpayers personal information and IRP5 information.
Taxman streamlines returns even further
The South African Revenue Services' new reconciliation form, known as the EMP501 declaration, came into effect at the beginning of this month.
The declaration, which all employers must complete and submit to the receiver, is another attempt by Sars to further enhance and streamline taxpayers' personal income tax returns.
The form will record the amount of tax deducted from employees, the amount paid over to Sars and the amount appearing on IRP5 certificates.
Deducted taxes on IRP5 include PAYE, UIF and the Skills Development Levy (SDL).
Tax experts have welcomed the new reconciliation form.
Robin Beale, consultant and tax specialist at PKF, formerly Fisher Hoffman, says: "We're moving towards a system similar to that in the US and other developed countries, where the onus is on taxpayers to assess their own tax liabilities."
Last year already taxpayers were not required to submit ancillary documents with their returns.
Now certain taxpayers with incomes below R120000 a year - who have a single employer and source of income and who meet certain criteria - will not have to complete and submit tax returns.
Their details and income stream will be automatically captured by the new process
Sars believes that the new system will ensure that it receives accurate information from employers, which will be used:
lTo pre-populate income tax returns for certain categories of individuals; and
lTo verify (match) information supplied by individuals on their tax returns.
In addition the information declared by employers will be used in PAYE audits of employers to verify whether the correct amount of tax was levied, deducted from employees and paid over to Sars.
Employers have a 60-day period to complete and submit the information to Sars. This year, the 60 days run from July 1 until August 29.
Sars has developed software that it will provide free of charge to assist employers to complete their reconciliation process electronically.
The software will allow the transfer of data to Sars and enable employers to generate standardised IRP5 certificates that will look similar to the new personal income tax return.
This means that the data transferred from employers will be used by Sars to generate "pre-populated" personal income tax returns.
The software is available for downloading on Sars' website or from any of its offices.
Sars says that while it will extend its services - through direct engagement and by providing automated tools and assistance to all employers who wish to comply - there will also be a far stronger focus on noncompliant companies.
Should employers not comply or meet their August 29 filing deadline, penalties, proposed to be at a rate of 10percent of the total PAYE liability, could be imposed.
But Sars maintains that for employees to obtain a pre-populated return, it will be necessary for employers to have submitted their reconciliation declaration.
So it is important that you approach your employer if you have not received your IRP5 certificate by the end of August or to check whether your employer has submitted your reconciliation information to the receiver.
What the changes mean.
lFiling period for returns opens on September 1.
lDeadline for manual submission of returns is November 21.
lDeadline for electronic submission of returns is January 23 2009.
lTaxpayers can request a return from Sars telephonically, at a Sars office or by downloading from eFiling.
lA pre-populated tax return will be issued containing taxpayers personal information and IRP5 information.