Cecil Kilpin | April 2023 Newsletter - Cecil Kilpin | CA(SA) - Accounting, Auditing & Tax Specialists

Employer Annual Declarations (EMP501): Due 31 May 2023

Employers are required to submit their annual reconciliation declarations (EMP501) that reflect accurate and the latest payroll information about their employees, monthly employer declarations (EMP201) for PAYE, UIF and SDL; payments made (excluding penalties and interest paid); and employee tax certificates (IRP5/IT3(a)s generated, covering the full tax year from 1 March 2022 to 28 February 2023.

To make it easier for you to reconcile, easily and conveniently we would like to draw your attention to essential information that you need to know:

Before submitting the annual EMP501 for 2023, employers must submit all outstanding monthly declarations (EMP201) and annual reconciliations (EMP501), as well as make all payments due
Employers, Tax Practitioners and Payroll Administrators need to download the latest Employers e@syFile version. This can be done via SARS eFiling at www.sarsefiling.co.za
Where employees are not registered for income tax purposes, employers must register them using Single (“Individual ITREG”) and bundle IT Registration (“Bundled ITREG”) for existing tax numbers as well as new registrations available on e@syFile™
First-time job seekers should be directed to register for income tax via eFiling

Accuracy and On-Time Filing are Critical.

The employer reconciliation process is an important first step in the wider income tax reconciliation process that enables SARS to issue individuals with an auto-assessment or a pre-populated income tax return (ITR12). Therefore, incomplete, or inaccurate information will make it difficult for your employees’ ability to meet their tax obligations.

Consequences for 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% point 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 subject to a fine or imprisonment for a period not exceeding two years, where, amongst other offences, fails to:

Deduct employees’ tax from remuneration or pay tax to the Commissioner within the prescribed period.
Deliver IRP5 or IT3(a) to employees or former employees within the prescribed periods.
Uses employees’ tax deducted or withheld for purposes other than the payment of such amount to the Commissioner.
Apply for registration as an employer.

Should you require assistance in this regard please do not hesitate to contact us for professional advice in this regard.

Employment Equity Amendment Bill Signed into Law.

President Cyril Ramaphosa has signed into law the Employment Equity Amendment Bill of 2020. The Amendment Bill seeks to advance transformation of South Africa’s workforce by setting equity targets for economic sectors and geographical regions, and requiring enterprises to develop transformation plans.

Among its key provisions, the Amendment Bill empowers the Minister of Employment and Labour to set employment-equity targets for economic sectors, as well as regions where transformation is lagging. The amendment Bill also empowers the Minister of Employment and Labour to regulate compliance criteria to issue Compliance Certificates as per Section 53 of the Employment Equity Act. The amended Act allows the Minister of Employment and Labour to set regional targets given that racial diversity in South Africa often has regional differences.

The law requires employers with more than 50 employees to submit employment equity plans for their companies, spelling out how they will achieve these targets. Employers are then required to submit annual reports to the Department of Employment and Labour.

In the area of remuneration, the law requires employers to pay workers equal pay for equal work. The Bill provides clear definitions of discrimination and sets out what workers can do when facing such discrimination – including lodging grievances with the Commission for Conciliation, Mediation and Arbitration, or the Labour Courts.

Companies seeking to do business with the state will be required to submit a certificate from the Department confirming that they are in compliance with the Employment Equity Act and its objectives, and that they do not pay their employees less than the national minimum wage. As part of ensuring the employment equity objectives become reality, the law now compels labour inspectors to inspect workplaces and to issue employers with compliance orders.

Reserve Bank Monetary Policy.

In March the Monetary Policy Committee decided to increase the repurchase rate by 50 basis points to 7.75% per year, with effect from the 31st of March 2023. Three members of the Committee preferred the announced increase. Two members preferred a 25 basis points increase.

The revised repurchase rate is now less accommodative and is more consistent with the current view of risks to inflation. The aim of policy is to anchor inflation expectations more firmly around the mid-point of the target band and to increase confidence of attaining the inflation target sustainably over time.

Guiding inflation back towards the mid-point of the target band can reduce the economic costs of high inflation and enable lower interest rates in the future. Achieving a prudent public debt level, increasing the supply of energy, moderating administered price inflation and keeping wage growth in line with productivity gains would enhance the effectiveness of monetary policy and its transmission to the broader economy.

Economic and financial conditions are expected to remain more volatile for the foreseeable future. In this uncertain environment, monetary policy decisions will continue to be data dependent and sensitive to the balance of risks to the outlook.

The attached Table sourced from the reserve bank paints the picture of the past four years as well as predictions over the next three years.

Tax Chronology of South Africa: 1979–2023.

The reserve bank has published an overview of the current and historical rates for various taxes, duties and levies collected by the South African Revenue Service (SARS). For the most important types of taxes, the coverage dates back to 1979, but for the less important ones, only a more recent subset is covered. It makes for interesting reading so we have summarised some of the key taxes over the years The full publication is available here.