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EMP501 Reconciliation Prep: Five Must-Do Tasks

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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.

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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!

EMP501 Reconciliation

8 Steps to Complete the 2023 Tax Year Submission Process

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8 Steps to Complete the 2023 Tax Year Submission Process

8 Steps to Complete Reconciliation and Submission

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 3Step 3, capture company information

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 needed.

Step 6

Calculate the totals and difference fields (If using e@syFileâ„¢ 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 2022 and February 2023
  • Contact Paymaster for expert help.

Contact Ian Hurst now on Ian@paymaster.co.za or 082 898 2426 for a quote.