10 Major changes to PAYE that you need to know about!

Accuracy and tax compliance are number 2 on SARS’ list of priorities – right after collecting more taxes!

In fact, this is why the new version of e@syFile is so important for SARS: Because it’s going to allow the taxman to start collecting taxes and employer declarations more and more often. The changes that have been made to the software system are significant. If you make one mistake (just one!) you’ll be slapped with a penalty of 10% of the PAYE you owe for the whole year! Yikes!

Do you know what major changes have been made to PAYE?

SARS has introduced 2 new major changes to PAYE:

New mandatory information that has to be provided - There are 9 new fields
Income Tax Registration for Employees

9 New mandatory information fields that has to be provided to SARS

You have to provide the following information on your employee certificates otherwise your certificates will fail validation. SARS is introducing two new concepts, namely, transaction year and year of assessment.

• Transaction year

The year in which you deduct and pay employees’ tax relating to remuneration paid or payable to an employee. This includes employees’ tax on remuneration which accrued during a previous tax year. In the past, where for example, you deducted employees’ tax, say for an arbitration award, where the accrual falls in the previous year, you had to submit a revised EMP Special Issue 101 recon for the previous year together with the additional tax certificate reflecting the arbitration award. From the 2010 June 2010 I02 IRP5, IT3(a) and ITREG:I02 IRP5, IRP5(a), AND IT3(a) 4/6/10 13:58 Page 005 I 02/006 IRP5, IT3(a) and ITREG PAYE filing season, if that is the case you will have to file an EMP 701.

• Year of assessment

The year in which the income accrued to the employee. Reconciliations will be generated based on Year of Assessment. The Year of Assessment is earlier than the Transaction Year, an EMP701 will need to be completed.

But thats not all, there are another 7 new mandatory information fields that need to be completed:

Period of reconciliation
Certificate number
Employees’ addresses in a defined format
Compulsory banking details
Compulsory income tax reference number
Compulsory ID number for SA citizens and passport number in other cases
Tax directives

Get all the full breakdown on all 9 mandatory information fields right now
when you order the Practical Tax Loose Leaf Service for a 14 day risk free trial

Income Tax Registration for Employees

Tax numbers for all employees are compulsory. Yes that’s correct! All employees have to have a tax number, even if they earn less than R60 000 per annum. Not all employees will have to submit a tax return, but they must all have tax numbers.

Initially, SARS said it had to be done this year. But the taxman has decided to relax his rules, and this requirement isn’t compulsory just yet… BUT, we suggest you get cracking on this now, so when it is compulsory, you’ll already be compliant.

Don't wait until the last minute. Avoid the mad rush and start getting compliant.

SARS will be providing employers with the ability to either verify their employees’ current income tax number or register them for the first time with a new number, if they’re not yet registered. The registration will be done by means of the certificate ITREG, which will be automatically generated by the new e@syFile software.

Employers will be able to do this electronically through e@syFile, since it was updated on 1 April 2010.

During the verification process, if the employee’s income tax number that he or she provided to their employer is wrong, SARS cannot give the correct number to the employer due to privacy laws.

The employee must therefore ensure that he provides the correct number to his employer. The responsibility will ultimately rest on the employer to obtain the correct number from the employee.

You are required by law to issue tax certificates and now that you have to make your employer submissions TWICE a year, you need to ensure you stay ontop of procedures and changes. Just one mistake could cost your company thousands.

In the Practical Tax Loose Leaf Service you will also uncover the ins and outs of employeesʼ tax certificates in 2010, including a breakdown of how to complete them!

What are employees’ tax certificates?
Why should you issue employees’ tax certificates?
What type of certificate should you issue when?
Deadlines for issuing certificates
Common errors to avoid
Submission process made easier
Sample employee tax certificate

Get all the full breakdown on tax certificates right now
when you order the Practical Tax Loose Leaf Service for a 14 day risk free trial

We will also provide you with tips, advice and examples to avoid pitfalls and penalties when you nail these 10 tax and payroll changes for the 2011 tax year:

Travel allowances now mean MORE admin and LESS take home pay
Now you must make your employer submissions TWICE a year
Your ENTIRE employer contribution to your employers medical aid is now a fringe benefit
Travelling employees can now get more subsistence cash per day
When calculating deductions for new learnership candidates, this one detail is key
The two reference numbers that must appear on EVERY return
Are you using source codes correctly?
Company trade classification codes now required
There’s a new code for “Nature of persons”... discover what it is...
The only time you must use the NEW EMP201 declaration form this tax season...

But that's not all...

If SARS comes knocking at your door, are you 100% confident that all your books are in order?

When it comes to tax you need to make sure you know your rights and ensure you never pay too much tax or end up with penalties of as much as 200%. Just relying on your accountant or tax consultant could end up costing you hundreds of thousands of rands.

Try our complete Tax Advisory Service risk-free for 14-days. As part of this service you’ll receive the Practical Tax Handbook, three Bonus Reports, Regular updates, the Weekly Tax Bulletin, Online access to past Tax Updates and a Tax Helpdesk.

What you’ll discover in the Practical Tax Loose Leaf :