Reconciling Payroll
Presenters : Ruzel van Jaarsveld
This video set out a practical, step-by-step approach to reconciling payroll for the 2027 tax year (1 March 2026 to 28 February 2027). It showed how the payroll register, EMP201 returns, IRP5/IT3(a) certificates, the EMP501 declaration, bank payments and the general ledger must agree to demonstrate that payroll complies with the law. Practitioners worked through monthly controls for PAYE, SDL, UIF and ETI, then certificate controls covering source-code mapping, fringe benefits and tax directives, followed by year-end EMP501 balancing and e@syFile checks. Worked examples and a table of common variances showed how to trace and correct differences at their source, and the video closed with guidance on building an audit pack and a final submission checklist.
Key Topics Covered
- The reconciliation framework: what a payroll reconciliation proves, the flow from payroll register through source-code totals, EMP201 returns and SARS payments to the EMP501, and the core documents that must agree
- The legal framework: the Fourth Schedule (duties for PAYE and the EMP201, the priority of employees' tax over other deductions, and five-year record retention), the SDL Act (1% of the leviable amount), the UIC Act (1% from the employer and 1% from the employee, up to the monthly threshold) and the Seventh Schedule on fringe benefits
- Monthly controls: a six-step monthly close covering taxable remuneration, deductions, tax tables, rebates and medical credits for PAYE; the correct SDL base; the UIF threshold and maximum contributions; matching EMP201 returns to payments; and ETI tracked for each qualifying employee
- Employee master data: identity, tax reference, employment dates and branch transfer controls that prevent certificates being rejected
- Source-code mapping: income codes for salary, annual payments (3605), commission (3606), overtime (3607) and fringe benefits (38xx), and deduction codes for pension and provident funds, retirement annuities, section 18A donations, PAYE (4102), UIF and SDL
- Allowances, fringe benefits and directives: the 80% or 20% PAYE inclusion for travel allowances, company vehicles, medical contributions, low-interest loans, long-service awards, and reconciling directive tax to certificate and EMP201 PAYE
- Year-end EMP501 reconciliation: balancing certificate totals against monthly declarations, checks to run before importing into e@syFile, treating validation rules as controls, and issuing certificates only once the EMP501 has been accepted
- Worked examples: a monthly EMP201 reconciliation, the UIF cap, a PAYE variance traced back to certificates, and calculating the SDL base
- Variances and corrections: a table of common variances with their likely causes and fixes, a six-step correction process, the contents of the audit pack and a final submission checklist
Practical Implications for Practitioners
- Close each payroll month as if SARS could ask for the EMP501 the next day.
- Reconcile payroll totals to the EMP201 before every submission, and keep proof of payment with each return.
- Treat source-code mapping as part of the tax treatment rather than a label added at year-end.
- Correct variances at their source in payroll instead of forcing EMP201 or certificate totals to balance.
- Keep a complete audit pack with registers, returns, proof of payment, mapping reports, directives and a signed sign-off sheet.
Intended Audience
Payroll administrators, HR managers, accountants and tax practitioners responsible for monthly and annual employer reconciliations.