Accaboeka Accounting Services

Navigation

SARS guide for employers in respect of employees tax

What do you need to do?

Register as an employer with SARS

If you have employees working for you, you need to register as an employer at SARS.
An employer must apply for registration with SARS within 14 days after he / she becomes an employer unless none of the employees is liable for normal tax.

Register yourself and your employees for PAYE with SARS

You need to register yourself and your employees for PAYE if the individuals' remuneration (including benefits) exceed the minimum tax threshold of R43,000 (employees under 65 years). At the same time that you register as an employer for PAYE, you are also registered as an employer for UIF and SDL at SARS.

Deduct and pay over employees tax and SDL

What is employees' tax?

It is the obligation of the employer to deduct and pay over employees tax. This obligation cannot be set aside by an agreement between the employee and the employer.
Where an employer pays remuneration to an employee, the employer must deduct employees' tax from the remuneration and pay the tax deducted to SARS on a monthly basis. In most instances, the employer is obliged to issue each employee with an employees' tax certificate (IRP 5) which reflects, amongst other detail, the employees' tax deducted. This employees' tax has to be split between SITE and PAYE. In addition thereto, the employer is obliged to submit an annual reconciliation (IRP 501) to the SARS office.
You don't need to deduct any Employees' tax from employees who earn less than the tax threshold of R43,000 (2007/2008 tax year).
So what is the difference between SITE, PAYE and Employees' tax? Employees' tax is deducted during the tax period. SITE is a form of employees' tax that is applicable only on the annualised net remuneration up to R60 000. The determination of SITE is done at the end of the tax period and may represent only a portion of the employees' tax deducted during the year. The balance of employees' tax after determining the SITE portion as well as the employees' tax on remuneration other than net remuneration, represents PAYE.

How do I know how much employees tax to deduct?

SARS provides tax tables that makes it easier for you to know how much to deduct and pay over to SARS. The tables can be used for weekly, fortnightly, monthly or annual remuneration.
You will need some advice as to what to include in the "remuneration amount" which you use on the tables, if your employees receive benefits like travel allowances.
Click here for the weekly tax deduction tables, here for fortnightly tax deduction tables, here for monthly tax deduction tables, and here for annual tx deduction tables.
It has to be paid before the 7th of the month following the month you pay for. For example, the contribution of May has to be paid on or before the 7th of April.
An EMP201 form has to be completed each month with the payment. This includes the declaration for PAYE, SDL and UIF.

What is SDL (Skills Development Levy)?

This is a compulsory levy scheme for the purposes of funding education and training. This levy came into operation on 1 April 2000 and is payable on a monthly basis.
Among other exceptions, the employer is not required to register as an employer for SDL purposes if there are during any month reasonable grounds for believing that the total leviable amount paid or payable by that employer to all its employees during the following 12 month period will not exceed R500 000 even though such employer is liable to register with SARS for employees' tax purposes.
SDL is calculated as 1% of the employees' remuneration, as is payable by the employer.
It has to be paid before the 7th of the month following the month you pay for. For example, the contribution of May has to be paid on or before the 7th of April.
An EMP201 form has to be completed each month with the payment. This includes the declaration for PAYE, SDL and UIF.

Register separately as an employer for UIF at the Department of labour, and pay over UIF

You have to register as an employer for UIF at the department of labour, even if you do not need to register any of your employees for PAYE (because they receive less than the tax threshold of R43,000 for 2007/2008 tax year), or SDL.
It is the obligation of the employer to deduct and pay over UIF for all employees who work more than 22 hours per month. This obligation cannot be set aside by an agreement between the employee and the employer.
UIF is calculated as 1% deducted from the employees' remuneration, and 1% contribution by the employer (limited to R109,66 per month per employee each). Therefore in total 2% of the employees' remuneration has to be paid to SARS (if you pay PAYE as well) or to the Commissioner (if you do not pay PAYE as well) on a monthly basis.
It has to be paid before the 7th of the month following the month you pay for. For example, the contribution of May has to be paid on or before the 7th of April.
An EMP201 form has to be completed each month with the payment. This includes the declaration for PAYE, SDL and UIF.
An UI-19 form has to be completed to register your employees with the Commissioner, and then whenever there are changes in employees or their remuneration. If you do not complete the EMP201 return on a monthly basis, you need to fax this form to the Commissioner on a monthly basis.

Issue salary slips

Employees should receive salary slips on a monthly basis, showing their remuneration and benefits, as well as all deductions (PAYE, UIF etc.) made. It is recommended that the employer keeps a copy signed by the employee.

Issue IRP5's or IT3(a) certificates

On an annual basis, as an employer you need to issue IRP5's for all employees from whom you deducted employees' tax during the year. For employees that are below the tax threshold, you have to issue an IT3(a) certificate. Your employees use this to complete their personal tax returns.
You obtain the IRP5 and IT3 booklets from SARS. The books contain 3 copies - one to keep in the book for record keeping, one to hand to the employee, and one that needs to be attached annually to a form (IRP501) that SARS will send you to compare tax deducted from the employee to what should have been deducted.

Record keeping

Every employer must keep a record of all remuneration paid, employees' tax deducted in respect of each employee and SDL and UIF contributions. This register must contain personal particulars as well as financial details of each employee.
Records must be kept for a period of five years from the date of the last entry and must be available for inspection purposes by SARS officials.
The employee must supply the following particulars to his / her employer to ensure that the employer’s records are correct —

􀃠 Surname and full names;

􀃠 Address;

􀃠 Identity number or passport number and date of birth;

􀃠 Income Tax reference number (if any);

􀃠 Proof of age; and

􀃠 Written declaration where required.

Refer to the link on the right hand side for more information.

Accaboeka can handle all your administrative functions as mentioned above, as well as your registrations and submission of returns.