The following content was published in Newsflash 2022/50 – PUBLIC HOLIDAY: :27 DECEMBER 2022

PUBLIC HOLIDAY: :27 DECEMBER 2022

The President has declared Tuesday, 27 December 2022 as a public holiday in lieu of Christmas day falling on a Sunday.

The press statement with regards to this event can be found by using the following link: https://www.thepresidency.gov.za/press-statements/president-declares-27-december-public-holiday#:~:text=South%20Africans%20will%20enjoy%20Tuesday,Act%20No%2036%20of%201994).

The following content was published in Newsflash 2022/51 – SARS NOTICE: ENHANCEMENTS TO THE FOURTH SCHEDULE PAR 2(2B) INSTRUCTIONS PROCESS

The following SARS notice brings the Fourth Schedule paragraph 2(2B) process into the enhanced tax directive system.

SARS NOTICE

IMPLEMENTATION OF TAX DIRECTIVE SYSTEM ENHANCEMENTS SCHEDULED FOR 9 DECEMBER 2022

The introduction of Par 2(2B) of the Fourth Schedule requires that employees’ tax be calculated and withheld at a fixed tax rate from an annuity, if a taxpayer receives remuneration from more than one source during a year of assessment and where one or more of those sources is from an employer who is a retirement fund or is licensed as an insurer under the Insurance Act.

These employers are required to apply the fixed tax rates prescribed and made available on e@syFile™ Employer or eFiling by SARS. The policy intention aims to ensure that the monthly employees’ tax is calculated correctly so that the taxpayer does not have a substantial tax shortfall due by you to SARS or due to you by SARS on assessment. These tax rates are calculated using prevailing tax rates and information pertaining to the taxpayer at the time of processing.

1. Given that such information may change and require a revised tax rate, an enhancement is required to cater for specific individual fixes as and when necessary and provide an indication to the retirement fund or a long-term insurer whether the tax rate results from:

• An initial full run
• A re-run
• A partial run
• A full year.

2. As is currently the process, once the tax rates have been calculated, the cover letter and tax rate file are generated, and made available to the employer on e@syfile™ Employer and eFiling (for employers with 50 or less employees).

3. Enhancements to the user roles on eFiling will be implemented to specify and provide clarity for the various user profiles with respect to the following functionalities:

• View – the user will be able to only view the letter containing the fixed tax rates related to Par 2(2B) of the Fourth Schedule.
• Completion – the user will be able to view and download the file and complete application forms.
• Submission – the user will be able to view and download the file, complete and submit application forms.

4. The IRP3(s) form has been improved to allow for employer share schemes that are longer than 5 years. The fields to indicate the qualifying periods during which the exemption under section 10(1)(o)(ii) may apply and other relevant fields were increased from 5 to 15 fields.

Sincerely,

ISSUED ON BEHALF OF THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE

December 2022

The following content was published in Newsflash 2022/52 – UIF NOTICE: APPROVED AUDITORS APPOINTED BY UIF FOR TERS AUDIT

On 8 December 2022, the UIF Commissioner signed a notice containing a list of auditing firms that have been approved by the Fund and mandated to audit employers for compliance with the TERS benefit requirements.

The following are the approved firms that will be contacting selected employers to arrange for information gathering:

1. The Accounting Village (Pty) Ltd;
2. NKS Chartered Accountants;
3. Inqaba Kadiya Consulting (Pty) Ltd;
4. Leolo and Partners Chartered Accountants;
5. Morobi Chartered Accountants;
6. Ndemex Business Solution; and
7. Ligwa Advisory Services.

If an employer receives a request from one of these firms, it is legitimate and must be complied with.

The full UIF Notice follows on the next page of this Newsflash, and on the page that follows, is an example of the information that employers / payroll systems must make available for the verification.

POST VERIFICATION AUDIT TO BE CONDUCTED ON ALL EMPLOYERS

Dear Employers.

The Unemployment Insurance Fund (UIF) would like to take this opportunity to inform all Employers and Bargaining Councils, who were paid under the COVID-19 TERS benefit, of the upcoming post-verification exercise to be conducted by the following audit firms who are duly appointed by UIF:

The Accounting Village (Pty) Ltd;
NKS Chartered Accountants;
Inqaba Kadiya Consulting (Pty) Ltd:
Leolo and Partners Chartered Accountants;
Morobi Chartered Accountants;
Ndemex Business Solution; and
Ligwa Advisory Services

The post verification exercise cornmenced during October 2022 and shall endure for a period of twelve (12) months,

The various Memorandum Of Agreements entered into between UIF and the employers. empowered the UIF to audit employers at any given time by an appointed auditor and lor internal verification team. The UIF is now accordingly invoking these provisions

The audit will be conducted at the premises Of the ernployers for verification purpose. In preparing for the audit. please make the following minimum information available:

Bank statements (showing all COVID-19 TERS enefits received to date from UIF and funds paid to employees by the employer);
Payroll reports (Periods January 2020 to June 2021 );
Contracts of employment;
Reconciliation of COVID-19 TERS funds (Total COVID-19 TERS funds received from I-JIF against or a comparison to COVID-19 TERS benefits paid to employees.

We humbly request the employers to cooperate with the above appointed service providers and provide them with access to information and personnel where needed

The Unemployment Insurance Fund is POPIA compliant and has signed a Non-Disclosure Agreement (NDA) With all the firms, UIF will ensure that the information obtained will be process for the audit purpose only. All due diligence processes were conducted on all audit firms. It should be noted that further information may be required during the audit process.

EXTRACT OF THE REQUEST BY THE APPROVED AUDIT FIRMS

We wish to notify you that our firm has been requested by the UIF to conduct a post verification exercise on your firm and would accordingly require access to various documentation to complete this exercise.

5. We accordingly request that we be provided with the following information within three (3) working days following receipt of this letter:
5.1 Bank statements, showing all COVID19TERS funds received to date from the UIF and money paid to employees by the employer;
5.2 Payroll reports (January 2020 to the last month of application);
5.3 Signed Memorandum of Agreement (“MoA”) with the UIF;
5.4 Reconciliation of COVID19TERS funds (total COVID19TERS funds received from the UIF against or a comparison to funds paid to employees);
5.5 A bank confirmation letter submitted to the UIF initially with the claims applications;
5.6 Communication letter/email sent to staff relating to the temporary closure of the business indicating the periods that the UIF claims were applied for;
5.7 Proof of payment of COVID19TERS funds to employees;
5.8 Proof of any refunds made by your firm to UIF; and
5.9 A schedule of forced leave days for employees listed in your COVID19TERS benefit application/s.

6. We will in due course provide you with a sample list of employees for which we will require the following further information:
6.1 Contracts of employment or appointment letters;
6.2 Payslips from January 2020 to the last month of your benefit application/s;
6.3 Clocking reports or attendance registers pertaining to the lockdown period applied for;
6.4 IRP5’s for 2021 and 2022;
6.5 Salary increase letters, where applicable; and
6.6 Termination letters, where applicable; and
6.7 Any other documentation or records deemed appropriate to fulfilling the post-verification exercise.

7. Our above request is in no manner exhaustive and should further documentation and/or records be required to fulfil the post-verification exercise, we trust that you will provide same.

Your assistance in this post-verification exercise is appreciated.

The following content was published in Newsflash 2022/53 – SARS NOTICE: TRADE TESTING OF THE TAX DIRECTIVE ENHANCEMENTS

SARS are in the process of enhancing their tax directive systems and are asking for employers and tax practitioners to help to with the testing of the changes.

The new processes should not impact on payroll systems, but payroll suppliers in their capacity as employers are welcome to join the testing.

As you can see from the notice below, the roll-out date of the enhancements is scheduled for April 2023 which will mean that the testing window will probably be in February and March 2023.

SARS NOTICE

Dear Stakeholder

TAX DIRECTIVES: TRADE TESTING DATES AND SOFTWARE IMPLEMENTATION

SARS will introduce enhancements to the Tax Directives process as indicated in the IBIR-006 Tax Directives Interface Specification Version 6.501. The trade testing dates are still to be confirmed and the implementation of the software is planned for implementation in April 2023. You will receive communication with regards to the exact dates for trade testing and the implementation date closer to the time.
The Tax Directives Interface Specification is available on the SARS website www.sars.gov.za and you are encouraged to review it prior to testing.

Please follow these steps to submit test files:
Step 1: Before testing can commence, you will need to email 10 taxpayer reference numbers to [email protected] to ensure the numbers are active. In the email subject line, use “Tax reference numbers for Trade Testing”. A maximum of 10 taxpayer reference numbers will be allowed.
Step 2: You will be notified via the same email address to confirm when testing may commence.

For trade testing queries please email [email protected]

Sincerely,

ISSUED ON BEHALF OF THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE

December 2022

The following content was published in Newsflash 2022/54 – COMMENTS INVITED: PROPOSALS REGARDING THE NATIONAL MINIMUM WAGE RATES

The National Minimum Wage Commission is established by the National Minimum Wage Act and is mandated to every year investigate and measure the impact of the national minimum wage rates against a list of seven economic factors, of which employment (or unemployment) is arguably the most important.

Following the annual investigation, the Commission prepares a report that includes a recommendation to either increase, leave unchanged, or reduce, the minimum wage rates for the following year, and submits it to Government for a final decision.

The final adjusted national minimum wage rates are usually issued in late January or early February and at the request of the PAGSA at the inception of this process, are made effective from 1st March for the tax year that follows.

The Commission has invited us to submit written representations on the effectiveness and impact of the national minimum wage for their consideration, taking into account the following medium-term target:

“All wage-earning workers must earn enough to maintain a decent standard of living, defined as sufficient to support themselves and their families at a level that is both socially acceptable and economtcally viable, The target should ensure that the value of the national minimum wage does not decline relative to the median wage.”

Please email your comments to [email protected] no later than 8 January 2023.

The following content was published in Newsflash 2023/35 – SARS VAT Modernisation discussion paper for comments

SARS NOTICE: VAT MODERNISATION DISCUSSION PAPER

SARS has published a Discussion Paper on VAT Modernisation. The intention of the publication is to invite vendors to submit contributions and comments before 31 October 2023.

The published document can be accessed via the following link: https://www.sars.gov.za/discussion-paper-on-value-added-tax-modernisation/

SARS NOTICE FOLLOWS BELOW:

Dear Valued Stakeholders

SARS has published a Discussion Paper on VAT Modernisation. This is in pursuit of its strategic objective of modernising its systems to provide digital and streamlined online services and making it easy for taxpayers to comply with their obligations. This discussion paper sets out the high-level vision for the modernisation of the South African Value-Added Tax (VAT) administrative framework.

The intention of publishing the discussion paper is to invite businesses (vendors), accounting system software developers or suppliers, technology entities, recognised controlling bodies, public finance entities, municipal finance entities and the public to submit contributions, and comments, as part of a consultative process to modernise the VAT administrative framework.

Comments may be submitted by close of business on 31 October 2023 to [email protected]

Linking from the SARS website homepage – https://www.sars.gov.za/: https://www.sars.gov.za/latest-news/publication-of-vat-modernisation-discussion-paper/

The following content was published in Newsflash 2023/34 – SARS: Employer Filing Season – Interim period ending 31 August 2023

EMPLOYER FILING SEASON: INTERIM PERIOD ENDING AUGUST 2023

SARS has issued a notice in respect of the 2023 Employer Interim Filing Season.

According to this notice, the filing season will commence on 18 September 2023 and ends on 31 October 2023. This includes all your reconciliation related documents (EMP501 and Tax certificates) for the period 1 March 2023 to 31 August 2023.

Please ensure that your Annual Reconciliation is submitted on or before 31 October 2023.

SARS NOTICE FOLLOWS BELOW:

Dear stakeholder

EMPLOYER INTERIM DECLARATIONS (EMP501): 18 SEPTEMBER TO 31 OCTOBER 2023

The South African Revenue Service’s (SARS) higher purpose is to enable the government to build a capable state to serve the wellbeing of all South African citizens. Thus, we remain committed to improving our service offering to provide clarity and certainty to make it easier for you to meet your tax obligations.

Tax compliance by all businesses, and employers – whether small, medium, or large makes a major contribution to economic growth and development of our country.

For this reason, we urge all employers to prepare for the Employer Interim Reconciliation period.

Employer’s Interim Reconciliation is part of the Filing Season

This year, the Employer Interim Reconciliation for Employers filing season starts on 18 September 2023 – 31 October 2023. During this period, all employers in both private and public enterprises must reconcile their Monthly Employer Declarations (EMP201). These reconciliations are based on the Monthly Employer Declarations (EMP201) submitted with the tax values of the interim IRP5/IT3(a)s certificates generated, accurate payroll information and employees’ tax (PAYE) payments made during the period 1 March 2023 – 31 August 2023. Thereafter, employers can submit an Employer’s Reconciliation Declaration (EMP501) to SARS.

Obligatory Tax Compliance

To ensure that your Tax Compliance Status (TCS) is up to date, employers who have outstanding payments, monthly declarations from prior years (EMP201) and annual reconciliations (EMP501) must submit and make all payments due. Failing which, your TCS will reflect as non-compliant.

Completing your reconciliation is now easier.

Please note the important information below to help you complete your EMP501:
• Employers, tax practitioners and payroll administrators need to download the latest e@syFile™ Employer version. This can be done via SARS eFiling at www.sarsefiling.co.za.
• Import the electronic Employee Tax Certificates [IRP5/IT3(a)s] CSV files from your current payroll system.
• Capture all additional manual IRP5/IT3(a)s, and e@syFile™ Employer will use the information from all the tax certificates to automatically calculate the certificate totals for your EMP501.
• Enter your monthly liabilities, payments and Employment Tax Incentive (ETI) information, if applicable, and e@syFile™ Employer will calculate the rest.
Submission channels
• Employers with 1 – 50 employees can use either SARS eFiling or SARS e@syFile™ Employer. If the employer has less than 50 IRP5/IT3(a) certificates, a tax certificate file can be generated from the payroll system and this file can be imported into
SARS eFiling.
• Employers that file EMP501s for more than 50 employees must use the e@syFile™ Employer.
• An exception is made for employers with a maximum of five (5) IRP5/IT3(a)s. The employer can still go into a nearest branch where an agent will help them capture these IRP5/IT3(a)s and the EMP501. Remember to book an appointment before visiting a SARS Branch.

Enhancements to e@syFile™ Employer

Maintenance and general enhancements, such as software version upgrades, will be made.

Accuracy and timely filing are critical.

It is very important for employers to capture the correct PAYE liability on the monthly EMP201 returns. The incorrect calculation of the monthly PAYE liability will result in the imposition of both penalties and interest. This includes corrections made on the EMP501 reconciliation as any shortfall is attributed to the last month of the reconciliation period.

Please submit your accurate reconciliation before the 31 October 2023 to avoid penalties and interest.

Consequences of non-compliance

If an employer submits the EMP501 late, administrative penalties will be charged. The penalty will equal 1% of the year’s PAYE liability, which will increase each month by 1% up to 10% of the year’s PAYE liability. Furthermore, an employer who wilfully or negligently fails to submit an EMP201 or EMP501 return to SARS is guilty of an offence and is liable, upon conviction, to a fine or imprisonment for a
period of up to two years.

What constitutes a criminal offence?

An employer is guilty of an offence and will be subjected to a fine or imprisonment for a period of up to two years where they amongst other offences, fails to:
• Deduct employees’ tax from remuneration or pay tax to SARS within the prescribed period.
• Deliver IRP5 and/or IT3(a) to employees or former employees within the prescribed periods.
• Use employees’ tax deducted or withhold for purposes other than the payment of such amount to SARS.
• Apply for registration as an employer.

Status of submission

Employers must always check the status of submissions to ensure their EMP501 was correctly filed at SARS.

More information

For information on the completion of manual certificates, please go to e@syFile™ Employer User Guide or access the Step-by-Step Guide to the Employer Reconciliation Process under Businesses and Employers page on the SARS website at www.sars.gov.za.

Sincerely,

THE SOUTH AFRICAN REVENUE SERVICE

4 September 2023

The following content was published in Newsflash 2023/32 – Employment Equity reporting period for 2023

CONFIRMATION OF EMPLOYMENT EQUITY REPORTING PERIOD FOR 2023

The following notice confirms that the Employment Equity Amendment Act that was promulgated in April 2023 and that introduces sectoral demographic targets, will not be made effective before 1 September 2023

Dear Employer Reminder:

Notice to all Employers regarding the 2023 EE reporting period

This serves to inform you that the EE Amendment Act, No. 4 of 2022 has not yet become effective. As a result of the pending commencement date of the EE amendment Act, No. 4 of 2022, all designated employers, including small employers (those with 1-49 employees) that are designated as per Schedule 4 of the Employment Equity Act, 1998 (EEA) must submit their 2023 EE Reports (EEA2 and EEA4 forms) using the current EEA.

Please note that the 2023 EE reporting period will open on 1 September 2023 for both manual and online submissions. The closing date for manual EE submission is 2 October 2023 and for the online EE submission is 15 January 2024 (midnight).

Kindly note that the annual reminder letters that contain the activation link will be circulated to all employers before 1 September 2023 to enable employers to activate their 2023 EE Reporting accounts.

Failure to submit your 2023 EE report by 15 January 2024 (midnight) will subject your organization to the enforcement process prescribed by the EEA. Your organization will also be omitted from the Employment Equity Public Register for 2023 reporting period that will be published by the Minister of Employment and Labour in terms of section 41 of the Act.

We look forward to your continued co-operation in fulfilling the requirements of the Employment Equity Act.

Yours sincerely

Ntsoaki Mamashela
DIRECTOR: EE-LABOUR POLICY AND INDUSTRIAL RELATIONS

The following content was published in Newsflash 2023/33 – SARS notice: Tax Directives implementation

SARS NOTICE: EXTERNAL DEBT COLLECTORS – HANDOVER

SARS has issued a notice with regards to the implementation of the enhancements to the Tax Directive system.

The anticipated changes have been listed and explained in the SARS notice.

SARS NOTICE

Dear Fund Administrator / Insurer

SARS TAX DIRECTIVES IMPLEMENTATION

The South African Revenue Service (SARS) will be implementing enhancements to the Tax Directives system during September 2023.

Please familiarise yourself with the following anticipated changes:

Paragraph (b)(xii)(bb) of the definition of “retirement annuity fund” in section 1(1): A member with more than one contract / policy in a retirement annuity fund can transfer one or more of these contracts / policies to another approved retirement annuity fund, subject to certain conditions. When transferring a contract / policy, the Fund Administrator must ensure that the value of the individual contract / policy in the retirement annuity fund being transferred to another retirement annuity fund is R371 250 and above, and that if an amount remains in the fund, the remaining value in the retirement annuity fund after the transfer, is at least R371 250. If the member’s total interest (all contracts / policies combined) in the retirement annuity fund is being transferred to one other retirement annuity fund, the monetary restriction on the value per transferring contract or policy is not applicable, and the member’s total interest can be transferred from one retirement annuity fund to another. Please note that this change is only applicable to transfers prior to retirement that take place from one retirement annuity fund to another retirement annuity fund.

Deemed retirement from a Provident Fund Par4(3) of the 2nd Schedule: Fund administrators must note that the reason “Provident Fund deemed retirement” cannot be used if the date of accrual is on or after 1 March 2023.

Paragraph 2(1)(c) of the Second Schedule: A retirement benefit, in respect of a member who has reached retirement age, that was transferred to a Preservation
Fund, cannot be accessed as a once-off withdrawal benefit, prior to retirement.
Recognition of Transfer To assist the Fund Administrators / Long-Term Insurers to understand the Recognition of Transfer (ROT) decline reasons, SARS has enhanced the response messages to be more meaningful to ensure that the recipients understand what needs to be corrected before attempting to resubmit the ROT.
Fund administrators / Long-term Insurers are reminded that when a retirement benefit is successfully transferred or there was a purchase of annuity on retirement, the receiving fund / Long-term Insurer must, submit a ROT to SARS. This is to confirm that the member’s benefit, as indicated on the tax directive, was received. SARS sends a notification to the receiving fund if the ROT has not been submitted to SARS after 21 working days. Where an ROT remains outstanding after 21 working days, the taxpayer will receive a notification. Should the ROT not be received from either the fund or the taxpayer after 21 working days may result in the taxpayer’s return being rejected and the transfer / POA will be treated as a withdrawal benefit and will be subject to tax as such.

Sincerely,

ISSUED ON BEHALF OF THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE
SERVICE

August 2023

Regards

The following content was published in Newsflash 2023/31 – COID Maximum Earnings calculation: Confidentiality relaxation

MAXIMUM EARNINGS CALCULATION – RELAXATION OF CONFIDENTIALITY

In the footer of PAGSA Newsflashes, it states that the newsflashes are firstly copyrighted in favour of the PAGSA, and secondly are confidential to PAGSA members and the statutory bodies that the PAGSA partner with.

These bodies include, but are not limited to, the Employment Equity Directorate, the Unemployment Insurance Fund, the Compensation Fund, and SARS.

This was done for good reason many years ago.

Besides proposing changes to the law and commenting on the draft amendments to the law as they unfold, one of the PAGSA’s primary functions is to communicate to PAGSA members any changes to payroll-related legislation or regulations that require returns to be made or taxes to be withheld, as well as interpretations and opinions on the law by the statutory bodies, and the administration requirements that payrolls must comply with.

New or changed requirements are issued in PAGSA Newsflashes as soon as the information is finalised.

Due to the importance of the information published in PAGSA Newsflash 2023-28 ‘COID Maximum Earnings Calculation’ and after requests received from some PAGSA members, we have decided to relax the confidentiality requirement for this newsflash only.

This means that you can issue PAGSA Newsflash 2023-28 directly to your clients should you so wish, resulting in a consistent message being issued to employers.

However we ask that should you do so, that you firstly acknowledge the PAGSA as the author of the document, and secondly that you request your clients to not distribute the information beyond their business.