Essential Reports needed for Annual EMP501 Submission

Essential Reports needed for Annual EMP501 Submission

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What are the essential reports needed to generate for the Annual EMP501 Submission?

To ensure a smooth Annual EMP501 Submission (IRP5) for the period 1 April 2024 to 31 May 2024, it’s essential to have the “Essential Reports needed for Annual EMP501 Submission”.

These submissions generate employee tax certificates for the period 1 March – 29 Feb 2024.

A guide to the reports needed for the IRP5 submissions:

Note: The report examples and directions provided are specific to the Paymaster Payroll system.

Step 1:

Balancing EMP201 and EMP501 Reports: Key reports for EMP501 submission

To begin, generate the EMP201 Report and EMP201 Breakdown Report from Reports > Reports > Standard (Classic) > Legislative. Additionally, generate the EMP501 Report for the selected tax year.

Balancing EMP201 and EMP501 Reports

Step 2:

Identifying Discrepancies between EMP201 and EMP501: Key reports for EMP501 submission

Next, identify discrepancies between EMP201 and the consolidated EMP501 by generating the following reports: For ETI imbalances, navigate to Reports > Reports > Standard (Classic) > Legislative and generate the EMP501 ETI Breakdown Report and ETI Take On report. For Tax, UIF, & SDL imbalances, navigate to Reports > Reports > Standard > Payroll and generate the Component Variance Report and Payroll Reconciliation Report. For employee biographical information, navigate to Reports > Reports > Standard > HR and generate the Dynamic Employee Details and New Engagements and Terminations reports.

Identifying Discrepancies between EMP201 & EMP501

Step 3:

Generating Test and Live CSV Files: Key reports for EMP501 submission

Once EMP501 reconciles with monthly EMP201s, generate Test and Live CSV Files per frequency for the correct submission period. Navigate to Reports > Tax Certificate Run to generate the Test CSV File. Upon successful validation, export the Live CSV File accordingly.

Generating Test and Live CSV Files

These reports will streamline the EMP501 reconciliation process and ensure accurate submissions.

Check out our VIDEO on how to reconcile the submission on PAYROLL and EASYFILE. Click Here

How to reconcile the submission on Payroll

Need some assistance?

Read our article for the 8 Steps to Complete the EMP501Submission

Our support team is ready and waiting to help. Please reach out to our helpdesk at help@paymaster.co.za or 021 712 7333.

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IRP5 document

The basics of the IRP5 document

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The basics of the IRP5 document

Understanding IRP5 document…

Author: Ian Hurst — Managing Director, Paymaster People Solutions

The IRP5 document provides a record of the income that you have earned during a particular tax year. Note: a tax year begins on 1 March and runs until 28 February of the following year. By law, your employer is required to inform the South African Revenue Service (SARS) about the income that you have received for a particular period. This includes informing SARS about the tax that was deducted from your salary. IRP5 information is automatically inserted into the document by SARS. If this hasn’t happened, the employee/taxpayer needs to speak to their employer in order to establish whether a reconciliation was indeed done or not. Note: SARS will not allow changes to the information on the IRP5.

Your employer informs SARS about these details by means of a twice yearly reconciliation submission directly to SARS. Once a particular tax year has come to an end, your employer is required to issue you with a hardcopy of your IRP5 document. If there happen to be any errors on the IRP5, for example, such as an incorrect source code, then your employer needs to correct the error and reissue your corrected IRP5 document.

Note: depending upon the number of employers that an employee works for, it is quite normal to be issued with more than one IRP5 for a particular tax year.

More details about the IRP5 document

The IRP5 document also provides details concerning the dates that you have worked for each employer. Additionally, details on the IRP5 will reflect to which tax year your income received, applies.

The different categories of income will be indicated by a unique SARS source code. Here are some examples of the categories of source codes that one might typically encounter on an IRP5:

Quick-guide to IRP5's

• Salary payments: source code 3601

• Bonus payments: source code 3605

• Travel allowance payments: source code 3701

• Other (i.e. miscellaneous) allowance payments: source code 3713

• Commission payments: source code 3606

• Medical fringe benefit payments: source code 3810

In some instances, the IRP5 might also indicate an employee’s salary deductions, as set-off against the tax calculation. This is done to reflect a series of calculations that applies before tax was deducted from your income amount. Examples of typical deduction source codes include the following:

• Employee pension contributions: source code 4001

• Employee retirement annuity contributions: source code 4006

• Employee provident fund contributions: source code 4003

• Medical aid contributions: source code 4005

To verify whether your employer declared the tax amount that was deducted from your salary, your IRP5 should reflect the primary PAYE source code 4102.

To verify to which tax year the income received amount applies, the uppermost section of the IRP5 document should indicate the relevant tax year. The IRP5 will also indicate the date when IRP5 information was completed by your employer, as well as the date when it was submitted to SARS. This is called the transaction year. For example: rental monies received in March 2023 must be accounted for in the 2023/2024 tax year.

Commission and lump-sum payments received

Quick-guide to IRP5'sIf you earned a commission or received a lump sum during a particular tax year, you should have received a tax directive number which is reflected at the bottom of the IRP5 document. Simply stated, a tax directive is an official instruction that SARS sends to the employer. This official SARS document ‘instructs’ the employer to deduct tax at a specified tax rate. Such tax rates are determined by SARS, on a case-by-case basis — dependent upon initial criteria submitted to SARS by the commission earner.

To conclude, personal income tax submissions have the potential to overwhelm most individuals. However, this need not be so. Contact Paymaster to help you navigate the IRP5 season safely.

Are you still unsure? For more information on how it all works, contact us, click here.

Paymaster People Solutions. Accurate, Timeous, Client Centered, Process driven, Payroll Software Simplified.

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Copyright 2023 Paymaster People Solutions | All Rights

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What to pay when your employee travels away from home

by with 5 Comments ArticleSubsistence allowance

What to pay when your employee travels away from home

Understanding the Rules of Subsistence Allowances for Travel Expenses

Travel is, once again, becoming part of the workplace. Since travel involves expenses, companies can either pay for accommodation and meals ( and reimburse incidental expenses) or pay the employee an allowance that covers all these expenses.

At Paymaster we regularly receive queries from our clients (either via email or our live website chat facility), to explain Subsistence Allowances. Based on these questions, the deemed rate and actual payment of expenses ( against submitted receipts) is the cause of much unhappiness.

It seems many employers consider processing travel-claim reimbursements (in excess of the deemed rate) as favouring the employee, even though this is tax deductible for the employer.

It seems SARS’s Subsistence Allowance document is the source of the confusion around this subject.

DEFINITIONS TO CLEAR THE CONFUSION

Allowance

  1. Allowance
    • An amount of money granted by the employer to the employee when business-related expenses are incurred ( without obligation for the employee to prove/account for these expenses to the employer). The amount of the allowance is based on the anticipated business-related expenses.

  2. Advance

    • An amount of money granted by an employer to an employee to incur business-related expenses on behalf of the employer, with an obligation on the employee to prove/account for the business-related expenditure to the employer. The amount for this advance is based on the anticipated business-related expenditure. The employer recovers the difference from the employee if actual expenses are less than the advance paid (or vice versa).

  3. Reimbursement

    • This occurs when an employee has incurred and paid for business-related expenses on behalf of the the employer, without receiving an allowance or advance. Therefore they are reimbursed the exact amount by the employer (after having proved and accounted for these expenses, to the employer).

ESTABLISH YOUR COMPANY’S POLICY

Regarding travel allowances:

What is in your contract of employment, and what is your company’s policy regarding Subsistence Allowances? This will shape the basis on which payment is made to the employee for their away-from-home work-related expenses. For example, does your company pay for hotels, meals (stipulating a maximum value), and incidental expenses? Be sure to clarify details, such as: do they consider parking costs as incidental expenses. And what is their policy on the purchase of cooldrinks and/or chocolates? Making this clear will avoid problems during the reimbursement process.

Here follows 2 examples of possible company policy clauses:

You will be required to spend some nights away from home. The company will pay for your accommodation (up to the value of Rxxxx,xx) and meals (up to the value of Rxx,xx). In addition, an allowance of R 161 (per night) will be paid to cover incidental costs (eg, chocolates, cooldrinks etc). No additional reimbursement claim-documents need to be completed.

Another possible policy clause may look like this:

You will be required to spend some nights away from home. The company will pay for your accommodation (up to the value of Rxxxx,xx) and meals ( up to the value of Rxx,xx). In addition, all receipts from any incidental expenses need to be submitted to the company. You will be reimbursed no later than 7 days after reimbursement claims are submitted.

WHAT THE LAW SAYS ABOUT SUBSISTENCE ALLOWANCE

  • A Subsistence Allowance is given to an employee in respect of incidental costs incurred when away from home, on company business, for at least one night (sunset to sunrise).
  • Where the employer pays for the hotel and meals, a Subsistence Allowance of R169 per night may be claimed (deemed rate).
  • Where the employer only pays for accommodation, the allowance is R548 per night (deemed rate). If breakfast is included in the rate, it is regarded as part of the accommodation rate.

HOW TO PAY A SUBSISTENCE ALLOWANCE

PLEASE note the following WARNING: a Subsistence Allowance WILL NOT form part of the employee’s remuneration package and should therefore be paid over and above their normal remuneration. And no employee’s tax should be deducted from this amount (even if it exceeds the deemed rate). This should be indicated on the IRP5, and SARS will make the required adjustments.

There are 2 ways to pay this allowance:

  1. Ask the employee for the expense slips, and reimburse them. This is not subject to the employee’s tax.
  2. Pay out the Subsistence Allowance as prescribed by SARS – no expense slips are required. This is not subject to employee tax UNLESS the amounts exceed the deemed rate. In that case, the employee will be taxed on the difference, unless receipts for the full amount are produced.

There is nothing to prevent the employer and employee from developing their own method to process claims for each trip. But to prevent an administrative nightmare, we suggest using the following payslip codes:

  • When the deemed (claimable) rate is exceeded, use the code 3704 (local) and code 3715 (international).
  • Where the deemed (claimable) rate is NOT exceeded, use code 3705 (local) and 3716 (international).

The employee can then complete the IRP5, and submit their annual return. Based on the IRP5, SARS can make the necessary adjustments.

(Please note: supporting documents for any expense claim must be archived for 5 years.)

FINAL QUESTION ON EXPENSES CLAIMS

What if my expense claims are less than the deemed rate, or if my company reimburses me less than the deemed rate?

Answer: On your annual return, you need to submit the details to SARS. They will then make the necessary adjustments to your return. The company cannot make any adjustments or give any tax relief (via the company payroll system) for any unclaimed or under claimed Subsistence Allowances.

Sources:

[1] Source: Juta’s Compendium of Tax Legislation (2014 Edition, Volume 2)

[2] Download the SARS guides here: https://www.sars.gov.za/tax-rates/employers/subsistence-allowances-and-advances/

https://www.hrmaster.co.za/wp-content/uploads/2024/11/2024-2025-Subsistence-Travel-Allowances-External-Guide.pdf

[3] Download international deemed rates here: https://www.sars.gov.za/wp-content/uploads/Docs/PAYE/Tables/2024/PAYE-GEN-01-G03-A02-Subsistence-Allowance-Foreign-Travel-External-Annexure.pdf

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