General requirements
For the first time ever, all employers will be required to submit a half-yearly return of tax certificates to SARS during September/October 2010. This will be similar to the annual return of tax certificates that we are all used to, with the following differences -

·                It will cover the period March to August 2010.

·                It will only be necessary to submit the electronic file (and EMP 501) reconciliation to SARS. The tax certificates must not be printed and handed to employees.

·                It will not be necessary to split the employees' tax into SITE and PAYE - the total tax deducted must be shown as PAYE (unless a certificate is for an employee who has been discharged, where the SITE has perforce been calculated).

·                All "mandatory" fields must be shown, and the relaxations made for the tax certificates issued in April/May 2010 are no longer applicable, except for tax reference numbers (dealt with next).

·                In particular, employees' addresses in the new format specified for the 2010 certificates are mandatory. A missing business, home or postal address will result in the tax certificate being rejected.
 

The final specifications for these tax certificates were issued by SARS on 14 July 2010, and are available on the SARS website. It would be advisable for all persons responsible for payrolls to read these specifications.

Tax reference numbers
You may recollect that although employees’ tax reference numbers were stated to be mandatory for the 2010 tax certificates, the rules were relaxed to permit such numbers to be omitted from those returns if they were not available.

This relaxation has been extended to the coming half-yearly return. SARS have confirmed that they will electronically issue all missing tax reference numbers to employers, working from the August 2010 tax certificate return. If an employee’s tax reference number is missing from the tax certificate and from the SARS database, SARS will electronically issue a tax reference number and send a file back to each employer containing all the newly allocated reference numbers. Employers can import the tax reference numbers from this file into their payrolls, or add the new reference numbers manually. This will happen early in 2011.

I am not sure at the time of writing what procedure SARS will adopt if the tax reference number is missing on the tax certificate, but is present on the SARS database. There are, I understand, some security considerations regarding the advising of such existing numbers to employers. No doubt SARS will clarify this in due course. Even if SARS just advises the employer that the employee is registered, the employer can then ask the employee to obtain the number from SARS.

The above procedure will only apply to the August 2010 submission of tax certificates. All submissions thereafter must contain tax reference numbers, else the tax certificates will be rejected by SARS.

To allow employers to get tax reference numbers for new (not existing) employees after August 2010, they will be introducing a new ITREG electronic form. This will contain all the indicative data normally held on tax certificates, but no amounts for earnings or deductions or tax deducted. The form type will be ITREG instead of IRP5 or IT3(a). These forms can be submitted (for new employees only) at any time through e@syFile, and SARS will allocate a tax reference number which they will send back to the employer. This procedure will be much easier than the existing IT77 procedure.

It should be realised that SARS wants all employees to have tax reference numbers, including those earning below the SITE limit. At present, SARS offices are refusing to register persons earning less than the SITE limit, but hopefully those offices will soon catch up with SARS’ new requirements. However, from past experience with new procedures, it will take a long time for the SARS offices to realise that things have changed!

Published:  Lexis Nexis

Date: July 2010