EMP501 Submissions: Late Submission Penalties and Request for Remission
SARS have issued a notice that is of particular importance for employers during the employer’s filing season that ends on 31 May 2022. The SARS notice clarifies that:
1.Administrative penalties will be raised on late (i.e. submitted after 31 Mary 2022) or non-submissions of EMP501 reconciliations. 2.The manually submitted ADR1 and ADR2 process for appeals will be replaced from 23 April 2022 by enhancing the SARS eFiling request for remission and disputes process. The SARS Notice follows. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER
Pending Clarification of Final Tax Amendments
PAGSA Newsflash 2022-03 discussed the simpler changes made by the 2021 tax amendment Acts that were published on 19 January 2022 and indicated that there are two complicated amendments that the PAGSA has been discussing with the authorities for some time to get clarity. The two amendments that require specialised attention are:
1.The extension to the reduction of the value of the ‘long services award’
2.The amendments to the ETI Act, in particular to the definition of “monthly remuneration”. This Newsflash is to update you on where we are, and the bad news is that we do not yet have answers. The problems arose in very late changes made by the Standing Committee of Finance to the final Taxation Laws Amendment Bill that was tabled in the National Assembly in November 2021. Discussions with the authorities have been underway since soon after the final Bills that were submitted to the National Assembly were published. SARS are doing their best to clarify the uncertainties and to provide solutions where there are implementation problems. The only indication that I can give with a reasonable degree of certainty is that we should have clarity by the end of this week. Newsflashes will be issued immediately to update you as soon as we have clarity. I am very well aware (as are the authorities) that the new tax year starts on Tuesday next week and apologise for the pressure that this places on you and your development team. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.
Compensation Fund Earnings Threshold for 2023/24
Towards the end of January 2023 I contacted the Compensation Fund authorities to inform them that the earnings threshold for the 2023/2024 year of assessment that payrolls must implement in their systems from 1 March 2023 had not yet been published and to request that it be published urgently. Gazette No. 48065 Published 17 February 2023
Gazette No. 48065 was then published on 17 February 2023 (signed on 13 Feb 2023 by the Director-General of the Department of Employment and Labour). This Gazette specified the threshold for the 2022/23 year of assessment as well as the threshold for the coming 2023/24 year of assessment, as follows:
The two earnings thresholds specified in this Gazette were published in PAGSA Newsflash 2023-05 on 17 February 2023 as follows:
1.R 529 264 for 1 March 2022 to 28 February 2023
2.R 563 520 for 1 March 2023 to 28 February 2024. 48187 Published 10 March 2023
On 10 March 2023, Gazette No. 48187 was published (signed on 13 Feb 2023 by the Minister of Employment and Labour) containing a notice that listed the “Increase in Monthly Pensions” over several pages. These are benefit payouts and are not of importance for payroll systems. Sometime later, to everyone’s surprise, one of our PAGSA members pointed out that new earnings thresholds were specified after the listing on the Monthly Pension Increases at the end of the Gazette. The earnings threshold for 2023/24 specified in this Gazette is R568 959 (specified in the previous Gazette as R563 520). This resulted in an exchange of emails between the PAGSA, the Fund, and the Department of Employment and Labour to determine:
1.Why two Gazettes were published with different earnings thresholds
2.Which of the two earnings threshold is the correct one for 2023/24. The first question won’t be answered, but it has now been confirmed that the earnings threshold specified in the second Gazette No. 48187 is the correct one and must be used for 2023/24. To confirm, the two earnings thresholds that must be applied in payroll systems are:
1.R 529 264 for 1 March 2022 to 28 February 2023
2.R 568 959 for 1 March 2023 to 28 February 2024. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.
Suspension of the E-CC System – Relaxation of Confidentiality
The by-line in the footer of PAGSA Newsflashes states that the newsflashes are copyrighted in favour of the PAGSA and are confidential to PAGSA members and the statutory bodies that the PAGSA partners with. These bodies include, but are not limited to, the Employment Equity Directorate, the Unemployment Insurance Fund, the Compensation Fund, and SARS. After the issue earlier in March of PAGSA Newsflash 2022-15 that explained the ‘Curbing of ETI Abuse’ new requirements, the PAGSA was requested to relax the confidentiality requirement for that newsflash only, and because of the complexity of the matter, and in the interests of compliant application of the new ETI requirements by all parties, the PAGSA agreed in PAGSA Newsflash 2022-16 to relax the confidentiality requirements. Recently, the PAGSA has been asked to relax the confidentiality requirements of PAGSA Newsflash 2022-18 (the suspension of the UIF E-CC System). The UIF Electronic Compliance Certificate system was introduced towards the end of January 2021, introducing historical declaration compliance requirements that in cases were impossible to comply with, resulting in many employers no longer being able to tender successfully. Not being able to tender successfully resulted in lost opportunities, damage to credibility with clients, unnecessary administration, problem follow-ups, and general time wastage, all of which comes at a cost. The negative impact potentially ripples forward to retrenchments, increased unemployment levels (plus the cost of the associated UIF benefit claims), and in general, on the economy of the country. As a result of submissions from organisations including the PAGSA, it was announced in a meeting held on 12 April 2022 that the UIF E-CC system would be suspended from that date, confirmed in PAGSA Newsflash 2022-18. For these reasons, the PAGSA has decided to relax the confidentiality requirements of PAGSA Newsflash 2022-18 (the suspension of the UIF E-CC System). This means that you can issue PAGSA Newsflash 2022-18 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 outside of their business environment. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.
Changes to Tax Laws for 2022/23
PAGSA Newsflash 2022-03 discusses the general changes to tax-related legislation that are effective from 1 March 2022. The following tax Amendment Bills were issued on 28 July 2021 and after comments and discussions, were promulgated and issued as final Amendment Acts on 19 January 2022:
1.Taxation Laws Amendment Act [TLAB]
This Act deals with the substantive changes to the Income Tax Act proposed in the 2021 budget. 2.Tax Administration Laws Amendment Act [TALAB]
This Act deals with the administration-related changes proposed in the 2021 budget to the various Acts that fall under SARS. 3.Rates and Monetary Amounts and Amendment of Revenue Laws Act [Rates Bill]
This Act confirms the tax tables, rebates and threshold changes proposed in the 2021 Budget. A second batch of tax amendment Bills was issued on 12 August 2021 to provide financial assistance to employers and employees suffering financial distress as a result of the July 2021 civil unrest. These Bills were discussed in PAGSA Newsflashes 2021-39, -40, -42, -43, -45, and 47, and because their effective period has come to an end, are not discussed in this Newsflash. Two of the changes included in the final amendment Acts are not discussed in this Newsflash:
1.The extension to the reduction of the value of the ‘long services award’
2.The change to the definition of ‘monthly remuneration’ in the Employment Tax Incentive Act. Both of these two changes have some complications, and the PAGSA has been in discussion with SARS to get clarity and to resolve the issues since the final Bills were submitted to Parliament in November 2021. To not delay this Newsflash any further, the other simpler changes are discussed in the sections that follow, and the more contentious changes still under discussion will be published individually as soon as we have final clarity. General Employment-Related Tax Amendments
Clarifying the Fringe benefit for employer contributions to a Retirement fund
Background
Since the introduction of the retirement reforms from 1 March 2016, paragraph 2(l) of the Seventh Schedule to the Act provides that employer-paid contributions to a retirement fund on behalf of an employee must result in a taxable fringe benefit in the employees’ hands. If the employer-paid contribution is to:
1.A defined contribution fund (a fund that consists solely of a ‘defined contribution component’), and the value of the fringe benefit equals the value of the contribution
2.A fund containing a ‘defined benefit component’ or an ‘underpin component’ (defined in paragraph 12D(1) of the Seventh Schedule) is a defined benefit fund, and the value of the fringe benefit is calculated according to a prescribed formula that includes a ‘fund factor’ that is provided to the employer by the retirement fund. When a retirement fund provides a retirement benefit in relation to a ‘defined contribution component’ and a self-insured risk benefit, an anomaly arises in that self-insured risk benefits were not seen to be a defined contribution component, resulting in the classification of the total contribution to the fund as a defined benefit component and the fund as a defined benefit fund. The fringe benefit was therefore calculated by using the prescribed formula. Final Amendment
To address this anomaly, the definitions in Seventh Schedule paragraph 12D(1) have been amended to:
1.Change the definition of a ‘risk benefit’
2.Add the definition of a ‘risk benefit policy’
3.Change the definition of a ‘defined contribution component’ to specify that as an alternative, it can result from a ‘risk benefit’ that is provided by a policy of insurance or a ‘risk benefit policy’. This means that a retirement fund that provides both defined contribution component retirement benefits and self-insured risk benefits is a defined contribution fund and the fringe benefit is therefore equal to the total employer-paid contribution. The value of the risk premiums under self-insured risk benefits will be determined based on the cost to the employer (i.e. the actual contribution made by the employer).
SARS ETI Verification Audit
SARS are conducting audits with regards to Employment Tax Incentive (ETI) claims made by employers and issue the following general letter to employers for submission of ETI records:
VERIFICATION OF RETURN(S)
The South African Revenue Service (SARS) has identified the return(s) for the following tax period(s), for verification: 201908
Pleases review your EMP201 return(s) against your relevant payroll calculations and relevant material. If any errors are detected you can correct them by submitting a revised EMP501 reconciliation via eFIling or e@syFile. Where you did not detect errors, submit the following relevant material for the above tax period(s):
Payroll or summary report for the period
A schedule of the employment tax incentive calculations per employee indicating their names, ID numbers, age, number of hours worked for the month, remuneration and the ETI calculation for the period under verification. Where the employees earned below R2000 per month, the bargaining council and industry regulations and agreements that allowed the employer to remunerate the employee for less than R2000
Please provide proof that the employer is subject to sector determination or bound by a bargaining council agreement which prescribed a lesser minimum salary than R2000
The payroll data for purposes of submitting the employees tax certificates contains all of the above-mentioned information, except for the “wage regulating measures”, if any. It is suggested that the employers submit the tax certificate information as available on the above-mentioned payroll file, specifically the following codes:
Code 3030: Surname
Code 3040: Names
Code 3060: ID number
Code 3066: Asylum seeker permit number
Code 3080: Date of birth
Code 3190: ETI employment date
Code 7006: ETI month
Code 7005: ETI qualifying month cycle
Code 7009: ETI SEZ code
Code 7007: ETI hours
Code 7002: ETI remuneration
Code 7003: Minimum wage applicable
Code 7008: Wage paid
Code 7004: Calculated ETI
The above-mentioned information is sufficient compared to the information requested by SARS to perform the verification. Although the “age” is specifically requested, it can be determined by using the “Date of Birth”. Regards,
Rhona van Taak
Admin Manager Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.
SARS Notice: Auto Registration of Individuals
SARS are taking steps to automatically register all individuals for Personal Income Tax if according to third party information available to, there is an indication of economic activity, and the individual is not registered. This strong action is taken in terms of section 22(5) of the Tax Administration Act that states:
“Where a person that is obliged to register with SARS under a tax Act fails to do so, SARS may register the person for one or more tax types as is appropriate under the circumstances or for purposes of section 26 (3).”
SARS Notice
PERSONAL INCOME TAX: AUTO REGISTRATION WILL BE INITIATED FROM OCTOBER 2022
As the South African Revenue Service (SARS) celebrates its 25th anniversary, we are committed to improving our service offering and enhancing our systems and processes to make compliance easy and seamless. Who can be auto registered? Automatic registration will be initiated for Personal Income Tax for an individual that is not registered for tax, but SARS detects 3rd party data that indicates economic activity. The person is automatically registered by SARS in terms of section 22(5) of the Tax Administration Act (Act No. 28 of 2011 as amended). Registration for other tax products
Please note that this registration is for Personal Income Tax (PIT) purposes only. If the auto-registered taxpayer is a sole proprietor, he or she may have to register for other tax products like PAYE for an employer, Value Added Tax for a vendor, and Customs and/or Excise if they are a trader in that field. Notification to the auto-registered taxpayer
SARS will send an SMS and a letter to such an individual, officially welcoming them as a registered taxpayer and informing them of how to access our services and what their rights and obligations are. What is next after registration? It is important for newly registered taxpayers to register for eFiling, as this is the most efficient way to file a tax return, view assessment results, make payments, and manage many other tax matters. More Information
More details regarding our channels, office hours, services, tailored information regarding Personal Income Tax, as well as a comprehensive FAQ repository are available on the SARS website: www.sars.gov.za
Sincerely,
THE SOUTH AFRICAN REVENUE SERVICE
29 September 2022
Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.
SARS message: Deceased Employee’s Tax Certificate Issue Period
SARS has requested that employers take note of their message published on their website relating to the issuing of tax certificates in respect of deceased employees. Due to the fact that a deceased employee’s tax period end on the deceased date, a tax certificate MUST be issued within 14 days after the date of death. The reasoning behind this, is to enable the executor of the estate to finalise the estate. One of the duties of an executor is to complete the tax returns of the deceased up to date of death. Message by SARS follows below:
Regards,
Rhona van Taak
Admin Manager Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER
Curbing ETI Abuse – 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 complexity of the changes to the Employment Tax Incentive Act that seek to curb the abuse of ETI that were published in PAGSA Newsflash 2022-15, 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 2022-15 directly to your clients should you so wish, resulting in a consistent message being issued to employers. It will also reduce any inadvertent errors that might creep in when rewording what was a difficult newsflash to write. 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. If your clients have queries on the new ETI requirements (as they undoubtedly will) the normal process must be followed whereby the client first contacts you, and if you can’t resolve the query, then the query can be raised with the PAGSA. In other words, your clients should not contact the PAGSA directly. Lastly, I will not be surprised if unexpected problems that nobody could foresee in the short time available will arise as we move forward with this complex legislation. If they do, we will communicate with you by Newsflash. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.
CODA Notice: Open-Day Meetings to Assist Employers
The Compensation Fund is holding three days of Open Day meetings for employers at the Birchwood Hotel and Conference Center, Boksburg, from 11 October until 13 October 2022 starting at 08h30 and ending each day at 14h30. The intention of the meetings is (and I quote):
“… to assist employers with queries that are not resolved and to make sure that they are finalised on the day. Employers will get an opportunity to directly engage with the processing officials (Specialists). If the Open Day format is well-attended, the Fund will consider holding more of these events in future. COIDA Notice
Compensation Fund (CF) are inviting employers who wish to be assisted with the following services:
EMPLOYER REGISTRATION FUNCTIONS
1. Application for the employer registration (manual and online)
2. Application for re-registration (Manual application)
3. Application for the change of nature of business (manual and online)
4. Application for the Deregistration
5. Trade Name updating
6. Address updating
7. Processing of Employer’s Banking Details
EMPLOYER ASSESSMENT FUNCTIONS
1. Clearing of employers who are flagged for audit
2. Application for the Revision of Assessment
3. Submission of Return of Earnings (To be assisted with the online submission)
EMPLOYER COMPLIANCE
1. Educate on the obligations of the employers
2. Auditing process conducted by the CF to ensure full compliance by the employers
GAUTENG COID PROVINCE
1. Assisting with the Claims
2. Enquiries on Claims
3. Registration on CompEasy system
4. Verification of claims for employers
ICT
1. Online Employer Registration Errors
2. System errors on the submission of the ROEs
CALL CENTRE
1. Application for the Tender Letter
2. Capturing of employer’s email address
3. CompEasy password and User’s Password reset
For further clarity, please call
Mr Tsholanang Moagi (Organising Committee member) at 0780498531 (only during
working hours) or the CF Call Centre at 0800 32 1322 and 086 0105 350
Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
All information provided by the PAGSA is subject to our DISCLAIMER.
