Articles main 2024 - 1

EMP501 Reconciliation Prep: Five Must-Do Tasks

by with 2 Comments ArticleTaxYear End

As we step into April, employers are reminded of the upcoming annual EMP501 Reconciliation Submission period. This process, occurring twice a year, requires employers to reconcile their IRP5/IT3(a) tax certificates, EMP201/EMP501 statements, and actual payments to SARS using e@syFile software. The February EMP501 reconciliation will reconcile the values for the entire tax year of 1 March 2023 – 29 February 2024 and will generate tax certificates for all employees on eFiling.

Articles main 2024 – 2

Here are five key steps to ensure a smooth EMP501 Reconciliation process:

1. Check that all the employee details are accurate and complete

Please check that all the information required by the receiver of revenue is correct and complete for all employees. So you will want to draw a report from your payroll system listing the following:

a)      Address of the employee

b)      Banking details of the employee

c)      Identity number or passport number

d)     Tax reference number

2. Reconciliations are done – payroll to tax paid

Reconcile all tax payments made to the receiver of revenue to the figures declared on the EMP201 form submitted to SARS. These must balance. If they do not balance you need to correct the issue as soon as possible, or make a note of why so that you can explain the differences on your annual submission. The best way to do this is to get the EMPSA from SARS. This shows the actual payments that they have recorded for the year. This can be compared with YTD totals from the payroll system. If they do not tie up then a correction can be made with the February EMP201. This means that the EMP501 reconciliation on Easyfile should not be a problem.

3. Confirm all submissions to SARS

Check to make sure that SARS have received all your EMP201 submissions and that there are no outstanding issues that need to be dealt with. It is always a good idea to keep up to date with SARS documentation.

Articles main 2024 – Keep up to date with SARS

4. Remind car holders to take mileage 1 March

Remind employees with company cars or car allowances to record their mileage from 1 March. Ensure company car details are accurately recorded in the payroll system.

5. Resolve any outstanding tax issues (retirement annuity numbers etc)

Make sure that all the earnings and deductions are listed under the right Payroll Codes (a list is available on the SARS website). In addition, make sure you have all the information for any retirement annuities you have been processing.

It is a useful exercise to run a ‘test IRP5 upload’ as this can show any oddities like negative 3601 income and negative non-retirement funding income which can be corrected in the February payroll. This also throws up incomplete addresses, business telephone numbers, retrenchment payments without directive numbers etc. These all have to be correct before Easyfile will accept the upload file.

For any assistance or queries, don’t hesitate to contact our Helpdesk at help@paymaster.co.za

Wishing you a smoothe and successful submission period!

Articles main 2024 - Leave - what are you entitled to?

Leave – what are you entitled to? Skillmaster’s HR Law Series explains!

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Uncertainty over leave entitlements?

Struggling to balance staff levels?

How does accrued leave work?

In South Africa the employer-employee relationship is often strained due to a lack of clarity regarding rights and obligations. The Basic Conditions of Employment Act (BCEA) sets out minimum standards for working conditions and governs all aspects of the employment relationship. But navigating the complexities of the BCEA can be a challenge for both employers and employees. This often leads to misunderstandings and disputes.

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Articles main 2024 - Unreasonable working hours?

Unreasonable working hours? Skillmaster’s HR Law series will empower you

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Excessive hours?

Inadequate pay?

Unfair working conditions impacting your job satisfaction?

But how do you navigate the complex workplace laws?

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Articles main 2024 - Tax Year EMP501 guide 2024

1 March tax year-end filing: EMP501 guide

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The Annual EMP501 Reconciliation Submission period is from 1 April 2024 – 31 May 2024.

Employers are required, twice a year, to reconcile their IRP5 / IT3(a) tax certificates; the EMP201/EMP501 statements; and the actual payments made to SARS, by using the e@syFile software provided by SARS. The February EMP501 reconciliation will reconcile the values for the entire tax year of 1 March 2023 – 29 February 2024 and will generate tax certificates for all employees on eFiling.

Please note that the Paymaster’s csv file is only compatible with e@syFile and not eFiling.

1 March is the day

From 1 March, you will be rolling over into the new tax year. Most payroll systems now “lock down the old tax year” and you can no longer change any of that information. So sort out any issues before the tax year-end. You really don’t want to start having to open the payroll to change earnings or deductions or add information once 7 March has come. Remind all your employees who have company cars or car allowances to record their mileage first thing on 1 March. Make sure all the details of the vehicle are recorded on the payroll. They will need to upload their log book or make sure that the logbook is complete for the tax year.

8 Steps to Complete the EMP501Submission

How to reconcile

Reconciliation involves matching all tax due (liabilities) with all tax paid and checking these against the total value of all tax certificates issued. These three (3) amounts should all be equal. The reconciliation process only relates to the tax paid and not additional tax, penalties or interest.

Reconciliation steps for employers:

Step 1

Before completing the EMP501 (for interim and annual submission), determine the total income of each employee for that year, and recalculate the tax based on that amount. IRP5/IT3(a) certificates should reflect the income, deductions and tax as calculated at this point.

Step 2

If the recalculated liability according to the tax certificates is different to the EMP201s previously declared, it will need to be determined in which month(s) these differences occurred.

Step 3

Capture all the relevant demographic information in the Business Information and Contact Details sections.

Step 4

Capture all the monthly liabilities for PAYE (before ETI deduction), SDL and UIF using these revised figures in the Financial Particulars section on the EMP501 (i.e. where different, the liabilities inserted on the EMP501 should be the final calculated liabilities rather than the liabilities declared on the EMP201).

Step 5

Capture the total monthly payments made in respect of PAYE, SDL and UIF but excluding payments made in respect of interest and additional tax. These are the actual payments made to SARS throughout the year – no recalculations are needed.

Step 6

Calculate the totals and difference fields (If using e@syFile™ Employer simply click on the self-assess button in order to populate all the totals and difference fields for you).

Step 7

Employers must calculate the SDL and UIF totals and capture the values. If the SDL and UIF contributions are not on the certificates this value must be calculated and completed.

Step 8

When settling any shortfall reflected in the reconciliation, the payment must be allocated to the period(s) in which the shortfall occurred. If the relevant period cannot be determined, the payment should be allocated to the last active period within the transaction, which is August (interim) and February (annual).

Make sure to check out our helpful EMP501 submission video guide to assist you throughout the reconciliation process and ensure a smooth tax year submission.

We can handle the entire submission process on your behalf

We simply will require the following from you :

  • A breakdown of all of your PAYE, SDL and UIF payments per month between March 2023 and February 2024
  • Contact Paymaster for expert help.

If this feels to overwhelming, consider joining the many happy Paymaster clients. Contact our Helpdesk for additional information.

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HR LAW series: HR Compliance with Skillmaster

HR Law Series: HR Compliance with Skillmaster

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Compliance concerns? Fair Labour practices in your workplace?
Facing workplace disputes, or struggling to navigate the dynamic legal landscape? Considering training to meet these challenges?

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STOP filing employee paper records

Stop filing employee paper records- paymaster offers electronic filing!

by with No Comment ArticleEmployee record keepingPayrollPayroll advicePayroll Tips

STOP filing employee paper records – paymaster offers electronic filing!

Tired of sifting through stacks of paper to find an employee’s records?

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Worried about the security of your paper records?

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Read our article to know what records to keep, when and in what format – Employee Record Keeping

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Contact us for more information at 021 712 7333 or ian@paymaster.co.za.

Manual Leave Forms Not with Paymaster

Manual Leave Forms? Not with Paymaster!

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Manual Leave Forms? Not with Paymaster!

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Switch to digital leave forms

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Still Printing Payslips

Still Printing Payslips – Not with Paymaster!

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Still Printing Payslips – Not with Paymaster!

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Retirement Part 2

Retirement – Dream or Nightmare! Part 2

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Why should you consider a retirement annuity (RA) to prepare financially for retirement?

They offer:

  • Tax advantages
  • a Disciplined way to save enough to invest for growth

In Part 1 of this series we started exploring why Retirement Annuities are an excellent option to prepare you financially for retirement. We continue that here: Part 2…

Some complex details should be considered when investing through a retirement annuity.

Your over-contributions will roll over

6. Your over-contributions will roll over

  • Your tax-deductible premiums are limited to 27.5% of your taxable income per year (up to a maximum of R350 000).
  • But you may invest more since over-contributions towards your RA will be rolled over to the following year – where they can be used for tax deduction purposes in that year.
  • The advantage – these over-contributions will enjoy investment growth (even though the tax benefit will only be gained in the following year).
RA funds not subject to estate duty

7. The funds in your RA are not subject to estate duty

  • Funds invested in an approved retirement fund (such as an RA) are not part of a deceased estate.
  • So its value is not taken into account when calculating estate duty.
  • RAs can be used effectively to reduce estate taxes.
Use your RA to reinvest

8. Use your RA to reinvest your tax refund

  • Consider reinvesting the tax refunds you receive from Sars.
  • At the end of the tax year, you’ll need to submit your IT3 certificate to Sars as part of your e-filing, providing proof of the contributions made towards your RA in that tax year.
  • When you receive your tax refund from Sars, you can invest the money back into your RA as an ad hoc contribution, further boosting your retirement savings.
You can stop contributing to your RA

9. You can stop contributing to your RA – no penalties

  • A feature of LISP-based RAs is that they are transparent, flexible investments.
  • They allow investors to completely customise their contributions.
  • This means that you can choose to contribute monthly, quarterly, bi-annually or annually.
  • Plus the option of making ad hoc contributions when circumstances allow.
Your RA death benefits are distributed

10. Your RA death benefits are distributed in accordance with the Pension Funds Act

  • The funds held in your RA will be distributed among your financial dependants in the event of your death as per the provisions of the Pension Funds Act.
  • This Act places a duty on the retirement fund trustees to establish the identity of your financial dependants (at the time of your death) and to allocate the benefits accordingly.

While Retirement Annuities are an excellent, tax-efficient option to save for your dream retirement, Paymaster advises that you consult a registered financial advisor to discuss the best way you can invest and prepare for this season in your life.

*LISP – an administrative platform – registered with FSCA – that packages, distributes and administers a range of investment products. (Linked Investment Service Provider).

To prepare for your retirement, see what other retirees have to share –

Navigating Retirement Challenges

In conclusion, Part 2 of our ‘Retirement – Dream or Nightmare!’ series explores critical aspects of Retirement Annuities (RAs). Discover why considering an RA is essential for your financial future. If you haven’t read Part 1, catch up now to make informed decisions about your retirement journey.

Part 1 👉 READ HERE

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