When an employer ceases trading, there are certain PAYE (Pay As You Earn) requirements that need to be fulfilled. Here are the general steps to follow:
1. Notify the South African Revenue Service (SARS): As soon as the decision to cease trading is made, it is important to inform SARS. You can do this by submitting a letter indicating the date of cessation and the reason for it.
2. Submit final Employer Reconciliation Declaration (EMP501): This declaration summarizes the total earnings, tax deducted, and other relevant information for all employees up until the date of cessation. Ensure that all outstanding PAYE, UIF (Unemployment Insurance Fund), and SDL (Skills Development Levy) payments are made.
• In terms of par 13(2)(c) of the Fourth Schedule to the Income Tax Act, an employer who ceased to be an employer, must submit the EMP501 reconciliation together with all associated IRP5 certificates to SARS within 14 days of the date on which the employer has ceased.
This means that the employer may submit the reconciliation immediately and do not need to wait for the filing season to open. Please note that the indicator on easyfile must be set as final certificate.
3. Issue IRP5/IT3(a) certificates: Provide your employees with their final IRP5/IT3(a) certificates, which detail their income, deductions, and tax paid for the period of their employment.
4. Settle outstanding taxes: Pay any outstanding taxes, including PAYE, UIF, and SDL, to SARS. This ensures that all tax obligations are met before ceasing trading.
5. Deregister as an employer: Once all tax matters are settled, you can apply to deregister as an employer with SARS. This can be done through the SARS eFiling system or by visiting a SARS branch.
It is important to note that these steps are general guidelines, and it is recommended to consult with a tax professional or contact SARS directly for specific guidance based on your situation.

The date of accrual refers to the date on which an amount becomes an unconditional right for an individual. It is the date when the individual becomes entitled to receive the amount, even if it has not been paid yet. This date is important for determining when PAYE (Pay-As-You-Earn) should be deducted from the remuneration.

Although accrual can be later than the actual received (paid) date, taxation will happen on the earliest of the 2 dates (accrued or received).

A fixed rate directive, also known as a Par2(2B) fixed rate directive, is a provision under the Fourth Schedule to the Income Tax Act in South Africa. It allows taxpayers who meet certain qualifying criteria to have a fixed rate of Pay-As-You-Earn (PAYE) tax deducted from their all remuneration paid by the employer.

The fixed rate directive is issued by the South African Revenue Service (SARS) and specifies the percentage of tax that should be withheld from the taxpayer’s remuneration paid by the employer. This fixed rate is applied instead of the regular PAYE deduction tables.

The recent SARS notice mentioned that the fixed rate directive rules have been revised, and additional criteria have been applied to ensure that the correct taxpayers are targeted and the correct fixed rates are prescribed. Some taxpayers who previously qualified for a fixed rate directive may no longer meet the criteria, resulting in a reduction in the number of impacted taxpayers.
If a taxpayer is no longer included in the revised fixed rate directive file, the administrator (employer) is required to revert to the regular PAYE rate as per the PAYE deduction tables or apply a higher rate specified in paragraph 2(2) of the Fourth Schedule if it is higher than the PAYE deduction tables.
If the revised fixed rate directive file prescribes a lower fixed PAYE rate than previously, the administrator may reduce the PAYE to be withheld for subsequent periods with amounts over-deducted in previous pay periods during the same year of assessment.

In terms of the definition of “normal retirement age” in sec 1 of the Income Tax Act, “normal retirement age” means –
• In the case of a member of a pension- or provident fund, the date on which the member becomes entitled to retire from employment for reasons other than sickness, accident, injury or incapacity through infirmity of mind or body;
• In the case of a member or a retirement annuity fund, a pension preservation fund or a provident preservation fund, the date on which the member attains 55 years of age; or
• In the case of a member of any fund contemplated in this definition, the date on which that member becomes permanently incapable of carrying on his/her occupation due to sickness, accident, injury or incapacity through infirmity of mind or body

A severance benefit is a payment or package provided to an employee upon termination of their employment. It is typically offered as a form of financial assistance to help the employee transition to new employment or to compensate for the loss of income. Severance benefits can include a lump sum payment, continuation of certain benefits, or other forms of compensation. The specific details and eligibility criteria for severance benefits may vary depending on the company’s policies, employment contract, and applicable laws. It is recommended to consult with your employer or HR department for more information about severance benefits in your specific situation.
Note: SEVERANCE BENEFITS IS NOT ONLY APPLICABLE TO PERSON 55 AND OLDER.

Calculating PAYE on a bonus payment involves a specific method to ensure accurate deductions. The bonus amount is added to the employee’s normal remuneration for the period and annualized. The total is then used to determine the appropriate tax bracket for the employee, based on the statutory tables provided by SARS. The tax is calculated on the annual equivalent of the total remuneration, and the resulting PAYE amount is deducted from the bonus payment. This ensures that the correct amount of tax is withheld on the bonus amount.

Employers in South Africa are required to register with the South African Revenue Service (SARS) when they meet certain criteria, which include:
1. Employers who pay salaries or wages to employees.
2. Employers who provide benefits to employees that are subject to employees’ tax (PAYE).
3. Employers who are required to deduct employees’ tax from remuneration paid to employees.
However, there are certain exemptions where an employer may not be required to register with SARS, such as:
1. Employers who do not have any employees and do not pay any remuneration subject to employees’ tax (PAYE).
2. Employers who only make payments to independent contractors and not to employees.
3. Employers who are not engaged in any trade or business activities that require the deduction of employees’ tax.
If an employer falls under any of these exemption categories, they may not be required to register as an employer with SARS. It’s important for employers to review their specific circumstances and consult with a tax professional or refer to the relevant tax legislation to determine if they are exempt from registering as an employer with SARS.

For SARS purposes, it is crucial to maintain accurate and up-to-date employee records. The following employee records should be kept for SARS compliance:
1. Employee personal details: This includes full names, ID numbers, addresses, contact numbers, and banking details.
2. Employment contract: A signed copy of the employment contract outlining terms and conditions of employment.
3. Salary and wage records: Detailed records of remuneration paid to employees, including salaries, wages, bonuses, and any other payments including deductions made.
4. Tax-related documents: Copies of employees’ tax certificates (IRP5/IT3(a)) and any other tax-related documents.
5. Leave records: Records of annual leave, sick leave, and any other types of leave taken by employees.
6. Time and attendance records: Records of employee attendance, including clock-in and clock-out times.
7. UIF records: Records of UIF contributions made on behalf of employees.
8. Training and development records: Records of any training, skills development, or courses attended by employees.
9. Disciplinary records: Records of any disciplinary actions taken against employees.
10. Termination records: Records of employee terminations, including reasons for termination and any exit interviews conducted.
By maintaining these employee records, you ensure compliance with SARS requirements and have the necessary documentation in case of audits or inquiries.

The STC (Secondary Tax on Companies) credit is calculated based on the amount of STC paid by a company on its declared dividends. The credit is calculated as a percentage of the dividends declared and paid by the company. The STC credit is used to offset the company’s income tax liability, thereby reducing the overall tax burden. The specific calculation of the STC credit can vary depending on the company’s financial situation and tax obligations. It is recommended to consult with a tax professional or refer to the relevant tax legislation for accurate guidance on calculating the STC credit. If you have any more questions or need further information, feel free to ask!
The STC credit is comprised of two possible sources:
Any unused STC credits of the company brought forward from the final dividend cycle under the STC system, and
Any new pro rata portion of any STC credit attaching to dividends accruing to the company under the Dividends Tax system. (REF: https://www.sars.gov.za/faq/faq-how-is-the-stc-credit-calculated/)

The STC (Secondary Tax on Companies) credit should be applied by offsetting it against the income tax liability of the company. The credit is typically used to reduce the amount of income tax that the company is required to pay to the South African Revenue Service (SARS). It is important to accurately calculate and apply the STC credit to ensure compliance with tax regulations and to optimize the tax position of the company. If you have any more questions or need further information on applying the STC credit, feel free to ask!
The company paying the dividend must notify the beneficial owner of any part of the dividend that carries a STC credit, and must be applied pro rata to the full dividend. If there is sufficient STC credit to cover the full dividend amount no Dividends Tax becomes payable by the beneficial owner. The remaining STC credit (if any) may be carried forward and be used in respect of future dividends. However, remaining STC credits will expire three years after 1 April 2012. (REF: https://www.sars.gov.za/faq/faq-how-is-the-stc-credit-applied/)

You only have to submit a STC return when it accompanies a STC payment (i.e. when STC is due). This requirement remains the same for the “final dividend cycle” under STC. Where an actual dividend has been declared and the dividend cycle ends on 31 March 2012, a return need only be submitted if STC is due.
Where the dividend cycle is deemed to end on 31 March 2012 (in terms of the proviso to the definition of “dividend cycle” in section 64B(1) of the Act) it is likely that no STC would be payable and hence no return would be required. The use of STC credits under the Dividends Tax system is not linked to the submission (or not) of a STC return. (REF; https://www.sars.gov.za/faq/faq-should-the-company-submit-a-stc-return-it56-reflecting-the-companys-available-stc-credits-for-the-last-dividend-cycle-under-stc-if-it-does-not-will-it-lose-the-stc-credits-under-the-d/)

The liability for Dividends Tax typically falls on the company or entity declaring and paying the dividend. The company or entity is responsible for withholding the tax and paying it over to the South African Revenue Service (SARS) within the specified timeframes. If you have any further questions or need more information, feel free to ask!
The beneficial owner of the dividend is liable for the Dividends Tax – normally this would be the shareholder. However, if the particular dividend consists of a distribution of an asset in specie the liability falls on the company paying the dividend (similar to the situation under STC). (REF: https://www.sars.gov.za/faq/faq-who-is-liable-for-the-dividends-tax/)

Medical schemes registered under the Medical Schemes Act of 1998 are exempt (provided the required declaration is submitted) as they fall within the definition of a “benefit fund” as defined in section 1 of the Act, which in turn is listed in section 10(1)(d)(ii) of the Act. (REF: https://www.sars.gov.za/faq/faq-are-medical-schemes-exempt-from-dividends-tax/)

The declaration and undertaking form for exemption can be obtained from the company or withholding agent who issued the dividend to the shareholders (beneficial owners). SARS will not be issuing these forms. Kindly contact the company or withholding agent if you have not received the form. (REF: www.sars.gov.za/faq/faq-as-a-beneficial-owner-where-can-i-obtain-the-declaration-and-undertaking-form-for-exemptions-for-completion/)

You only need to declare your exempt status per the declaration and undertaking form once (per company / withholding agent) and it will remain valid until your circumstances as the beneficial owner affecting the exemption change. Therefore, if you hold more than one share via the same regulated intermediary (withholding agent) you only need to complete a single form. However, if you hold shares via more than one regulated intermediary you would have to complete the form for each regulated intermediary. (REF: https://www.sars.gov.za/faq/faq-do-i-have-to-complete-a-declaration-and-undertaking-form-for-exemption-for-each-dividend-share-in-my-share-portfolio/)

Please note: Effective 20 January 2015
• A beneficial owner of a dividend in specie which is exempt has to submit a return to the Commissioner of SARS.
• A refund can now be claimed for a dividend in specie.
(REF: https://www.sars.gov.za/faq/faq-what-is-a-dividend-in-specie/)

Where a declared dividend is payable to shareholders of a company listed on the JSE Ltd the tax is triggered on the actual payment date.
In respect of unlisted companies the tax is triggered by the earlier of actual payment and the date the dividend becomes “due and payable”. (REF: https://www.sars.gov.za/faq/faq-is-there-a-difference-in-payment-dates-in-respect-of-dividends-declared-on-shares-listed-on-the-jse-and-those-on-unlisted-shares/)