The obligation to provide access to certain information about your business
14 SeptemberWhy SARS requests supporting documents
14 SeptemberIn the past SARS required the Employer Reconciliation to be done every twelve months. A few years ago SARS introduced the Employer Interim Reconciliation in addition to the annual Employer Reconciliation.
The Employer Interim Reconciliation have the same requirements as the Employer Reconciliation, with two exceptions:
- The Interim Reconciliation is completed for six months only, and
- The tax certificates generated during the Interim Reconciliation are only submitted to SARS and not distributed among employees, except in certain circumstances as set out in the table below.
The major benefit of performing the Employer Interim Reconciliation is that it decreases the pressure on employers with their Employer Reconciliation at the end of the tax year, as only six months have to be reconciled for each reconciliation.
The table below shows the major differences between the Employer Interim Reconciliation and the Employer Reconciliation, followed by some tips on how you can prepare for the next Employer Interim Reconciliation.
| Requirement | Employer
Interim Reconciliation |
Employer
Reconciliation |
| Periods included for 2015/2016 tax year | 1 March 2015 – 31 August 2015 (6 months) | 1 March 2015 – 29 February 2016 (12 months) |
| Submission deadline for 2015/2016 tax year | 30 October 2015 | To be announced by SARS (normally 3 months after the end of the tax year i.e. 31 May 2016) |
| Failure to submit or late submission | Penalty of 10% of total amount of Employees’ Tax per month that employer fails to submit a complete reconciliation | Penalty of 10% of total amount of Employees’ Tax per month that employer fails to submit a complete reconciliation |
| Failure to indicate taxable fringe benefits on employees’ tax certificates | Penalty equal to 10% of the cash equivalent of the taxable fringe benefit | Penalty equal to 10% of the cash equivalent of the taxable fringe benefit |
| Give IRP5/IT3(a) certificates to employees | No, except if the employee stops working for the employer e.g. if the employee resigns or retires, or if the employer closes down its business between 1 March 2015 and 31 August 2015 | Yes, but only after an acceptable Employer Reconciliation has been submitted to SARS |
| Deadline for giving IRP(5)/IT3(a) certificates to employees | Not applicable, except if the employee stops working for the employer during the period from 1 March 2015 to 31 August 2015 | To be announced by SARS but after submission deadline for Employer Reconciliation and usually before opening of tax season for individuals |
Tip 1: Start preparing now
Get a jumpstart on the reconciliation process by starting to confirm employees’ personal details. Draw up a confirmation form of personal details needed to complete employees’ IRP5/IT3(a) tax certificates. These forms should be completed and signed by each employee and kept in the Employer Interim Reconciliation file as part of the working papers. The details that must be confirmed with employees are the following:
- First two names and surname
- Date of birth
- South African ID number or Passport number and name of country which issued the passport
- Income Tax reference number
- Contact details:
- Postal address
- Residential address (including postal code)
- Cellphone number
- Home telephone number
- Work telephone number
- Fax number
- E-mail address
- Banking details:
- Bank account number
- Bank account name
- Type of account e.g. savings or cheque
- Branch name
- Branch number
- Indication of whether it is their own bank account, a joint bank account or a third party bank account
Tip 2: Use the latest version of easyFile
Make sure that you use the latest version of easyFile when doing the Employer Interim Reconciliation as well as the Employer Reconciliation, as reconciliations and tax certificates done on previous versions of easyFile software will be rejected by SARS. Check the SARS website for updates and the most current version of easyFile software.
Employer reconciliations don’t necessarily need to be a nightmare. Some timely preparation will go far to make the reconciliation process smoother and less stressful.
If the above article raised any questions in your mind please do not hesitate to contact our office. We look forward to the opportunity to assist you.
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.
Reference List:
- sars.gov.za