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Employers and Payroll Software Suppliers Face Significant PAYE Statutory Requirement Changes
Johannesburg, 23rd March, 2010 - Employers and payroll software suppliers need to prepare for new statutory PAYE requirements effective 1st April, including multiple PAYE tax certificate returns, new format monthly payment returns, and IRP5 tax certificate changes.
This is according to Ron Warren, executive chairman of payroll software company NuQ, who says that companies need to ensure compliancy and that their systems are updated to cater for the new format requirements.
New format monthly EMP201 Forms (PAYE returns)
SARS has introduced a new format EMP201 return for the paying of an employer’s monthly PAYE, UIF and SDL deductions and contributions. This form comes into use for the payment due in April 2010.
He says that a write-up on this form has been published on the SARS website, labelled PAYE EMP201 – A guide for employers to the new monthly declaration process, and SARS has recently sent a notice to employers about this new form. Warren explains that this will be similar to the existing EMP201 form, with the details regarding the number of employees removed and the following new sections added –
• the employer’s UIF and SDL registration numbers;
• a “Particulars of declarant” section, giving a whole lot of data (10 fields) about the person completing the form;
• a unique payment reference number which will be issued automatically by e-filing or the bank to which payment is made;
• the year and month covered by the payment;
• a signed and dated declaration of correctness.
Warren explains that if a payment covers more than one month, a separate form EMP201 must be completed for each month for which payment is being made.
“This will make the year-end EMP501 and EMP701 declarations easier, and will also no doubt make it easier for SARS to raise the appropriate penalties for late payment,” he says.
As the form will be introduced in the first week of April 2010, all payments to SARS relating to the current 2011 tax year will be in the new format. Payroll systems should therefore cater for this new format as soon as possible.
He says that employee tax certificate formats have improved, for example specific fields are now provided for each element of the employees residential and business addresses and more detailed employee business addresses are also required, and payroll software suppliers need to update their systems to cater for the new IRP5 certificate format, and tackle converting payroll data to the new format.
This is according to Ron Warren, executive chairman of payroll software company NuQ, who says that companies need to ensure compliancy and that their systems are updated to cater for the new format requirements.
New format monthly EMP201 Forms (PAYE returns)
SARS has introduced a new format EMP201 return for the paying of an employer’s monthly PAYE, UIF and SDL deductions and contributions. This form comes into use for the payment due in April 2010.
He says that a write-up on this form has been published on the SARS website, labelled PAYE EMP201 – A guide for employers to the new monthly declaration process, and SARS has recently sent a notice to employers about this new form. Warren explains that this will be similar to the existing EMP201 form, with the details regarding the number of employees removed and the following new sections added –
• the employer’s UIF and SDL registration numbers;
• a “Particulars of declarant” section, giving a whole lot of data (10 fields) about the person completing the form;
• a unique payment reference number which will be issued automatically by e-filing or the bank to which payment is made;
• the year and month covered by the payment;
• a signed and dated declaration of correctness.
Warren explains that if a payment covers more than one month, a separate form EMP201 must be completed for each month for which payment is being made.
“This will make the year-end EMP501 and EMP701 declarations easier, and will also no doubt make it easier for SARS to raise the appropriate penalties for late payment,” he says.
As the form will be introduced in the first week of April 2010, all payments to SARS relating to the current 2011 tax year will be in the new format. Payroll systems should therefore cater for this new format as soon as possible.
He says that employee tax certificate formats have improved, for example specific fields are now provided for each element of the employees residential and business addresses and more detailed employee business addresses are also required, and payroll software suppliers need to update their systems to cater for the new IRP5 certificate format, and tackle converting payroll data to the new format.
Tax Reference Numbers
Another major change is that all individuals regardless of how little they earn are now required to have a tax reference number, and employers must reflect this on the IRP5 certificate.
Another major change is that all individuals regardless of how little they earn are now required to have a tax reference number, and employers must reflect this on the IRP5 certificate.
Multiple Returns
SARS is also introducing more than one annual return for employee tax certificates, effective September 2010. Companies will be required to submit their normal return for the 2010 tax year, followed by a half-year interim return in September 2010 for the first six months of the new 2011 tax year, and another return for the full tax year in February 2011. The six-month provisional return will need to reflect all tax certificate information to date, but those tax certificates should not be printed.
Another change is that IRP5 tax certificates will no longer have eight-digit serial numbers but a 30 character code that includes the employers PAYE reference number, the year the certificate was issued, and the reporting month. This information will take up the first 16 characters and Warren says the remaining 14 characters can be used for meaningful information, ending with a serial number.
""Each tax certificate will have a unique number,"" he says. With the new numbering system companies will be able to issue a replacement certificate with the same number, for example, to make an adjustment for a previous year.
They will also be able to issue an additional certificate for the same tax year for an employee and SARS will add the two together.
Warren says that the most far reaching change is the option for payrolls to allow not just tax certificates but the associated forms EMP 501, EMP 601 and EMP 701 to be completed within the payroll system. (Forms EMP 601 and 701 are the forms which cater for the re-opening of previous years’ reconciliations for late adjustments to tax certificates issued in previous tax years.)
The detailed technical specifications for these forms have not yet been published, but will no doubt be available in the near future.
SARS is also introducing more than one annual return for employee tax certificates, effective September 2010. Companies will be required to submit their normal return for the 2010 tax year, followed by a half-year interim return in September 2010 for the first six months of the new 2011 tax year, and another return for the full tax year in February 2011. The six-month provisional return will need to reflect all tax certificate information to date, but those tax certificates should not be printed.
Another change is that IRP5 tax certificates will no longer have eight-digit serial numbers but a 30 character code that includes the employers PAYE reference number, the year the certificate was issued, and the reporting month. This information will take up the first 16 characters and Warren says the remaining 14 characters can be used for meaningful information, ending with a serial number.
""Each tax certificate will have a unique number,"" he says. With the new numbering system companies will be able to issue a replacement certificate with the same number, for example, to make an adjustment for a previous year.
They will also be able to issue an additional certificate for the same tax year for an employee and SARS will add the two together.
Warren says that the most far reaching change is the option for payrolls to allow not just tax certificates but the associated forms EMP 501, EMP 601 and EMP 701 to be completed within the payroll system. (Forms EMP 601 and 701 are the forms which cater for the re-opening of previous years’ reconciliations for late adjustments to tax certificates issued in previous tax years.)
The detailed technical specifications for these forms have not yet been published, but will no doubt be available in the near future.