Incorrect IRP5 Certificate

Incorrect IRP5 Certificate

• 25 July 2024
• Tax Administration
• The Tax Faculty Tax Specialist

These articles are based on tax law for the year ending 28 February 2025.

1. Background

For the 2023 year of assessment, a client received total remuneration of R3,036,765, from which PAYE of R1,222,789.93 was withheld. However, the IRP5 issued by the client's former employer incorrectly reflected only R1,205,452 in remuneration and R482,944.75 in PAYE withheld. Despite multiple attempts over several months to have the IRP5 corrected, the employer has refused to rectify the discrepancy and instead directed the client to resolve the matter with SARS. This refusal has resulted in administrative non-compliance penalties amounting to over R12,000 due to the non-submission of the client's tax return.

2. The Problem / Facts

How can a taxpayer resolve an issue where their employer issued an incorrect IRP5 certificate and refuses to correct it, resulting in potential penalties and suspected fraud?

3. Applicable Law 

TAA 28 of 2011, section 95(3)

4. Application of the Law to the Facts

It is evident that the taxpayer cannot submit an accurate return due to an incorrect IRP5; therefore, he needs to reach an agreement with SARS to issue an estimated assessment in terms of section 95(3) based on the evidence provided. The burden of proof always resides with the taxpayer, and it is suggested that the following actions be taken:

Report the Matter to the Police:

Alleging fraud. The case number is important as evidence in the submission to SARS.

Approach the CCMA:

• File a complaint that the employer has not fulfilled their obligation towards the employee in terms of the employer/employee relationship.
• Request the CCMA to grant an order compelling the employer to issue the corrected IRP5.

These actions can support the taxpayer in affirming that he is doing everything reasonable to comply with his obligations toward SARS.

Engagement with SARS:

The taxpayer should engage with SARS to issue an estimated assessment in accordance with the evidence presented. The following documents can be presented as evidence to support the taxpayer’s request:

• All payslips issued by the employer for the year of assessment in question.
• Bank statements showing the movement of salary into the taxpayer’s account from the employer, and if applicable, a copy of the service contract.
• Name and contact details of the employer.
• Physical address of the employer.
• Documents confirming the request to the employer to issue the corrected IRP5 and the employer's reply (if available).
• Affidavits filed with the police, including case numbers, and any CCMA confirmation of a complaint.

Past Experience

It has been reported by tax practitioners that when the taxpayer goes to the SARS branch with as much evidence as possible, they have had success in having SARS issue an assessment considering the correct PAYE. If visiting the branch is not possible, book a telephone appointment and upload all the evidence along with a cover letter explaining why the taxpayer’s circumstances require SARS to issue an estimated assessment based on the evidence provided.

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