Interim employer reconciliation, third party declaration period open: SARS

The Revenue Service warned that failure to fulfil these obligations may attract penalties and potentially criminal charges.

The interim employer reconciliation and third party declaration period are now open, the South African Revenue Service (SARS) said on Tuesday.

“As part of ensuring that SARS provides certainty and clarity of the legal obligations of employers and third parties, SARS wishes to announce that the interim employer reconciliation and third party declaration period is now open and closes on 31 October 2020,” the Revenue Service said in a statement.

For both large and small employers, a reconciliation of the first six months of declarations of employment taxes, monthly payments of these taxes and employee tax certificates [IRP5 and IT3(a) certificates] generated between 1 March and 31 August, is due.

“The elements that must reconcile in the employer declaration on staff earnings for the first half of the year include the monthly employer declarations submitted for Pay As You Earn (PAYE), Skills Development Levy (SDL), Unemployment Insurance Fund (UIF), Employment Tax Incentive (ETI), as well as the monthly payments of these amounts and the employee tax certificates generated depicting the values for PAYE, SDL, UIF and ETI, where applicable,” SARS said.

Third parties such as financial institutions, investment schemes and medical schemes, among others, are required to submit declarations such as medical contributions by members and expenses not covered by the medical scheme, interest earnings, retirement annuity contributions, amounts emanating from any investment, rental of immovable property, interest or royalty, amongst other declarations.

The Revenue Service warned that failure to fulfil these obligations may attract penalties and potentially criminal charges.

“The focus of SARS will be on the accuracy and completeness of what is submitted by employers and third parties, to avoid the many errors and corrections still experienced. These errors and corrections have a negative effect on the individual taxpayers that they relate to.”

SARS is refining its risk mitigation and detection measures, and sharpening its existing audit and investigation capacity to identify and collect the tax due, and address non-compliance.

“Employer and third party compliance, importantly, enable SARS to provide a seamless experience for individual taxpayers when fulfilling their tax obligations.”

Legislative and system changes

On the COVID-19 Tax Relief Measures announced by the Minister of Finance earlier this year, SARS said this provided employers with deferral relief for Pay As You Earn, a four-month skills development levy holiday, and an enhanced employment tax incentive, as per the amended Disaster Management Tax Relief Administration Bill (DMTRAB). 

The DMTRAB requires deferred amounts to be paid in six equal monthly instalments, commencing on 7 October 2020 until 5 March 2021.

“SARS has implemented these measures, but has not relaxed its deadlines for the submission of declarations and payment where relief has not been sought and thus penalties apply for late or non-submission,” said SARS.

Meanwhile, the latest version of e@syFile™ is available for the interim reconciliation period.

It has been updated for increased user-friendliness, as part of SARS’ service commitment to making compliance easier for taxpayers.

In addition, SARS has amended the Statement of Account (EMPSA) to include details of the deferred payments under the COVID-19 Tax Relief Measures.

This will allow qualifying employers to remain compliant.

A list of enhancements to the eFiling and e@syFile platforms can be viewed at Interim Reconciliation Enhancements.

SARS is directly communicating with third parties and payroll administrators to assist with filing and training where required.

Similarly, on the enforcement side, SARS is engaging third parties, particularly employers who have outstanding monthly returns and payments.

Voluntary disclosure 

SARS also invited employers to regularise any tax defaults from previous years through the Voluntary Disclosure Programme (VDP). 

A successful application through the VDP process waives penalties pertaining to the default disclosed, which otherwise could range up to 200%. 

VDP applications can be made on eFiling.

Taxpayer queries

Employer and third party queries may be made to the contact centre or an appointment with a branch via the booking system on the SARS website. 

“All third parties are reminded to consult the SARS website for important information on the interim reconciliation period at Third-party declaration process and  Employees Tax What’s New,” said the revenue service. 

(With Inputs from South African Government Press Release)