Employment Taxes Validation

Employment Taxes Validation

• 13 May 2020
• SARS

Obligation to deduct correct amount of PAYE every month

Employers are obligated to deduct the correct amount of employees’ tax (PAYE) from an employee’s remuneration and to declare and pay such amount to SARS on a monthly basis. The amounts declared by the employer on the EMP201 monthly return is the total amount of all PAYE deducted from all employees during the relevant month. 

This means that the employer cannot deduct amounts, which are more or less than the amount that is properly deductible according to the employee’s remuneration tax rates. For this reason, the employer should not have an under- nor over-deduction of liability unless the employee requested the employer in writing to deduct an additional amount of PAYE.

Employers are obligated to re-calculate the final tax liability at the end of the employee’s year of assessment, or when the employee resigns, is retrenched or dies before the end of the year of assessment. However, this often only happens when the reconciliation is prepared (up to 60 days after the end of the year of assessment). The re-calculation of tax may then result in an over- or under-deduction of tax.

Tax Calculation Process

From the 2020 year of assessment, SARS is performing tax calculations on the IRP5/IT3(a) certificates. Where it is found that the incorrect amount of tax was deducted from the employee, a letter will be issued, accompanied by a file containing a list of the certificates that have failed the SARS calculation.

The tilde (~) delimited text file containing the reasons for the failure(s) will also be sent to the submitting channel.

• e@syfile validation calculation file: can be found on the EMP501 Status Dashboard.  After clicking “Update” to see the submission status, click the “Download Employment Tax Validation” button located at the top of the screen to download the tilde (~) delimited text file.
• eFiling validation calculation file: can be found on the EMP501 work page next to the EMP501 information. Click on “View” under the View Certificate Errors heading. The file will be downloaded or an option to save will be displayed (depending on browser used).

Note: The purpose of the Payroll Tax Validation letter is to inform the employer of discrepancies on the amount of tax or levies that were deducted for employees. All the certificates submitted were accepted and processed and will be pre-populated on the employee’s income tax return (ITR12).

Please click here to read more.

This article first appeared on sars.gov.za.

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