My client has not received an IRP5 from his employer during the 2017 & 2018 tax years. PAYE was deducted and can be substantiated with payslips and bank statements. My client has however already submitted his tax returns for 2017 & 2018, but has not inclu
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
From the information provided it appears that the employer did not submit the employer reconciliation. You indicated that the employee’s tax was actually withheld (deducted from the amounts paid to the individual), but didn’t say if it was (or was not paid) to SARS. If it was not paid to SARS, the employer is liable to pay the amount – as withholding agent. See section 157(1) of the Tax Administration Act: “A withholding agent is personally liable for an amount of tax withheld and not paid to SARS …” In addition, the employer may be guilty of an offence – see section 234(p) of the Act - irrelevant to your client.
It would then indeed only be from the pay slips that the employee would be able to prove that the employees’ tax was in fact withheld.
We agree that the voluntary disclosure is appropriate here. There certainly was a 'default', namely the submission of inaccurate or incomplete information to SARS.
We accept that the individual did not obtain the IRP5 subsequently and that the employer didn’t submit the reconciliation either. If the correct return option is taken, the problem is that SARS, because no employer reconciliation was submitted, will not be able to verify the information and will request the individual to obtain an IRP5 from the employer.