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SARS Submissions

Employers are required, twice a year, to reconcile their IRP5 / IT3(a) tax certificates; the EMP201/EMP501 statements; and the actual payments made to SARS, by using the [email protected] software provided by SARS. The August 2020 reconciliation relates to the first half of the 2020 tax year (March 2020 – August 2020).

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[email protected] Software

The current version of [email protected] is 7.0.5.

SARS is in the process of finalising their latest [email protected] version for the August submission period.
The latest version of [email protected], which needs to be used for the August submission, as well as the updated csv file on PaySpace will be available for download by 14 September 2020.
Please note that the Payspace csv file is only compatible with [email protected] and not eFiling.

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Submission Period

The submission period for the Annual PAYE reconciliation declaration is Monday, 14 September 2020 to Saturday, 31 October 2020.

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How can we help you?

PaySpace has compiled two specific options to help you through your submission obligations and make the process as seamless as possible. (Please refer to Option 1: Do it yourself or Option 2: Let us do it!)

VERY IMPORTANT!

If the tax file was obtained from Payspace, and/or the EMP501 was submitted on [email protected] prior to the filing season opening (14 September 2020), a new tax file will need to be generated on Payspace and the file will need to be resubmitted on the latest version of [email protected] once filing season has opened. If the file is not submitted on the latest version or is submitted prior to filing season-opening, the declaration may reflect as outstanding and may result in penalties for non-submission.

What are your options?

PaySpace has compiled two specific options to help you through your submission obligations and make the process as seamless as possible.
OPTION 1

DO IT YOURSELF

  • Please refer to the guide which includes a handy checklist for the submission.
  • If you would like to be equipped to take full ownership of your Interim Reconciliation via the Electronic Submission Channel as prescribed by SARS, please enquire about our Mid-Year Tax Submission Training Course via the button below. The course will dive into the theory and practical application of the mid-year submission process and will provide you with the necessary knowledge and skills to prepare your payroll and retrieve the CSV Tax File from PaySpace.
OPTION 2

LET US DO IT

We can handle the entire submission process on your behalf:

  • For customers with less than 150 employees in a single company, a fee of R5 000.00 excl. VAT will be applicable.
  • Customers with more than 150 employees or more than one company will be charged on a time and materials basis at R1000.00 excl. VAT per hour with a minimum charge of R5 000.00 excl. VAT per company.
  • Please be advised that all charges above exclude any time taken to apply for tax reference numbers on behalf of the client. This will be billed on a time and materials basis (R1000.00 excl. VAT).
  • Please note, the above fees apply to companies that give us notice of their intention to have us handle the submission process on their behalf before 14th October 2020. After this date, the minimum fee will increase to R7 500.00 excl. VAT.

We simply will require the following from you should you select option 2:

A breakdown of all your PAYE, SDL and UIF payments per month between March 2020 and August 2020. Although these details may already be on PaySpace provided that you have been with us since the beginning of the tax year, we will still require your confirmation of the actual payments made.

The Technical Stuff: SARS Changes

The Technical Stuff: SARS Changes

The following section will supply you with more information on SARS changes based on Tax Code/Field, the amendments and important comments of the change effective for the August 2020 submission.
Tax Code/Field Amendment Comments
2026: Employer Contact Person: Bus Tel No Validation rule amended Must be at least 10 characters long (previously 9 characters)
2039: Employer Contact Person: Fax No Validation rule amended Must be at least 10 characters long (previously 9 characters)
2035: Employer Trade Classification Validation rules amended Amended from Mandatory to Conditional as follows:
– If YoA is prior to 2021, then this field is mandatory;
– From 2021 YoA, this field must not be completed
3010: Certificate Number Description Note added and validation rule amended Description Note: If a certificate is cancelled and replaced with a new certificate, the certificate number of the cancelled/replaced certificate MAY Not be reused and allocated to the same or another employee in the same year.

Validation Rule amendment: The certificate number must be unique per employer and must never be reused in any prior or current year.

3020: Nature of Person Note added
Validation Rules
Nature of person A & B
Note: From the 2020 year of assessment, directors of a Private Company / member of a CC must be included (in Nature of person A or B)
3026: ETI (Employment Tax Incentive) Indicator Validation Rule amended The value must only be Y (Yes):
– If Nature of person is A or C or R and Id number is valid; or
– Nature of person is M and Alternate Identification Number is populated;
– If ETI Employment date is on or after 01/10/2013 and Year of Assessment is not 2021;
– Year of Assessment is equal to Transaction Year;
3040: First Two Names Validation Rule removed Mandatory if initials, date of birth or identity/passport number has been completed
3050: Initials Validation Rule removed Mandatory if date of birth or identity number has been completed
3263: Employee SIC7 Code Validation Rule added Field must not be completed if Nature of Person is equal to N
3135: Employee Home Tel No Validation rule amended Must be at least 10 characters long (previously 9 characters)
3136: Employee Bus Tel No Validation rule amended Must be at least 10 characters long (previously 9 characters)
3137: Employee Fax No Validation rule amended Must be at least 10 characters long (previously 9 characters)
3170: Certificate Tax Period Start Date Validation rule amended If YoA (code 3025) is greater or equal to 2000, then this field must be greater or equal to 1 January of the YoA (code 3025) minus 1 year
3180: Certificate Tax Period End Date Validation rule amended If YoA (code 3025) is greater or equal to 2000, then:
– If current date is less than the last day of the Period of Reconciliation (code 2031), then this field cannot be greater than the current date plus 30 days
– If current date is greater than the last day of the Period of Reconciliation, then this field must be less or equal to 30 April of the YoA
3230:Directive number Validation rule added If YoA is greater or equal to 2021 and codes 3907/3957, 3908 are completed, then Directive Number is mandatory and MUST NOT BE zeros
4102: PAYE Validation Rule added If YoA (source code 3025) is greater or equal to 2021 then PAYE (source code 4102) must be less or equal to the sum of Non-taxable income (source code 3696) and Gross Employment Income (taxable) [source code 3699]
7005:ETI qualifying 12 month cycle indicator Validation rules amended
and added
Amended:
Value can only be 0,1, 2 or 3Added:
– 3 – if the employee qualifies for additional ETI (increased ETI due to COVID19)
– Option 3 only applicable if YoA is 2021 and Month (code 7006) is 04, 05, 06, or 07;
7007: ETI Hours Validation rule amended If Code 7005 is 1, 2 or 3, then this field must be greater than zero;
7002:Remuneration Paid Validation rule amended If Code 7005 is 1, 2 or 3, then this field must be greater than zero
7003: Minimum Wage Description amended This indicates the minimum wage which is the higher of:
– The national minimum wage, or
– The minimum wage according to the wage regulating measureNote:
– If the employer is exempt from the national minimum wage after successful application and there is no wage regulating measure, then this field must be zero.
– The same minimum wage rate (hourly, weekly or monthly) that is used for code 7003 must be used for 7008
7008:Wage paid Validation rule amended If Code 7005 is 1, 2 or 3, then this field must be greater than zero
7004: Monthly Calculated ETI Validation Rules removed SECTIONS THAT HAVE BEEN REMOVED: – If YoA is 2021 and Month (code 7006) is 04, 05, 06 or 07 and ETI qualifying 12 month cycle indicator (code 7005) is 1, then value cannot be greater than R1750, Else, if ETI qualifying 12 month cycle indicator (code 7005) is 1, then value cannot be greater than R1000;
– If YoA is 2021 and Month (code 7006) is 04, 05, 06 or 07 and ETI qualifying 12 month cycle indicator (code 7005) is 2, then value cannot be greater than R1250, Else, if ETI qualifying 12 month cycle indicator (code 7005) is 2, then value cannot be greater than R500;
– If YoA is 2021 and Month (code 7006) is 04, 05, 06 or 07 and ETI qualifying 12 month cycle indicator (code 7005) is 3, then value cannot be greater than R750
7004: Monthly Calculated ETI Validation Rules replaced If YoA is equal or greater than 2021 then:
– If month is 04, 05, 06, or 07, then
– If ETI qualifying 12 month cycle indicator (code 7005) is 3, then this field MUST be greater than zero;
– Else,(code 7005 = 1 or 2) – If ETI SEZ code (code 7009) is completed then this field MAY be greater than zero (0.00) – If ETI SEZ code (code 7009) is not completed:
– If employee’s age for the specified month is greater than / equal to 18 but less than 30 then this field MAY be greater than zero (0.00)
– If employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
– Else,(month <> 04, 05, 06, 07) § If ETI SEZ code (code 7009) is completed then this field MAY be greater than zero (0.00) If ETI SEZ code (code 7009) is not completed:
– If employee’s age for the specified month is greater than / equal to 18 but less than 30 then this field MAY be greater than zero (0.00)
– If employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
3603/3653:Pension (PAYE) Explanation amended Any compulsory pension or  qualifying purchased annuity paid on a regular basis (from a pension or pension preservation fund) as well as backdated pension or compulsory purchased annuity payment (from a pension or pension preservation fund) (for current tax year).
3611/3661: Purchased annuity Explanation amended The taxable portion of a  purchased annuity paid by a long-term insurer (not from a retirement fund).
3618/3668:Annuity from a Provident/Provident Preservation Fund (PAYE) New Code
Effective 1 March 2020
Any qualifying annuity paid on a regular basis from a provident or provident preservation fund as well as backdated provident or qualifying annuity (from a provident or provident preservation fund) (for current tax year)
3724: Amounts paid by any COVID-19 Disaster Relief Organisation (IT) New Code
Only applicable for 2021 Year of Assessment
Any payment/benefit received from a COVID-19 Disaster Relief Organisation (so called sec 18A Relief scheme/fund) and paid to an employee
Note: This code must NOT be used for benefits received from the UIF Temporary Employees Relief Scheme (UIF TERS)
3908: Exempt Policy Proceeds (Excl) Description & Explanation amended Description:
Note: Surplus apportionments must only be included until 2012 YoAExplanation:
Surplus apportionments on or after 1 January 2006 and before 1 March 2012 paid in terms of section 15B of the Pension Funds Act of 1956.
4030 Explanation amended Donations deducted from the employee’s remuneration and paid by the employer to an approved Organisation or Institution, including to a COVID-19 Disaster Relief Organisations, but EXCLUDING to the Solidarity Fund.

Note: A maximum donation to be allowed as a deduction by the employer when calculating the monthly PAYE is 5% of the employee’s remuneration after deducting allowable retirement fund and retirement annuity fund contributions

4055 New Code
Only applicable for 2021 Year of Assessment
COVID-19 Solidarity Fund Donations: Donations deducted from the employee’s remuneration and paid by the employer to the Solidarity Fund

Note:
A maximum donation to be allowed as a deduction by the employer when calculating the monthly PAYE is a percentage of the employee’s remuneration after deducting allowable retirement fund and retirement annuity fund contributions over specific months:
– 33.33% for 3 months (April, May and June 2020); or
– 16.66% for 6 months (April to September 2020)

4587 New Code
Only applicable from 2021 Year of Assessment
Section 10(1)(o)(ii) exemption taken into account by the employer for PAYE purposes

Note:
Basic Principles:
– 1 The exemption remains an assessment determination by SARS (i.e. when the completed ITR12 return is submitted by the employee to, and processed by, SARS).
– 2 Employers are therefore required to declare the foreign service remuneration as per the SARS Business Requirements Specification: PAYE Employer Reconciliation or notices issued to employers in this regard. SARS will determine whether the exemption is allowable when processing the ITR12 return submitted to SARS by the employee based on the information provided in the ITR12 return together with the IRP5/IT3(a) certificate information submitted by the employer
– 3 The potential that the employee may qualify for the exemption does not automatically waive the obligation of an employer to deduct and pay PAYE. Where an employer is satisfied that the exemption will apply, the employer may choose not to deduct and pay PAYE. However, where the exemption is not allowed when the ITR12 of the employee is processed, the employer will be liable for the PAYE not deducted as well as the concomitant penalties and interest.

Keep in Mind

  • From the 2020 year of assessment, SARS is performing a second round of validations on the PAYE and SDL values on the IRP5/IT3(a) certificates that have been submitted during the Interim Reconciliation process via [email protected]™ Employer. This is known as Employment Taxes Validation (ETV).
  • Values will be recalculated based on the data provided on the IRP5/IT3(a) certificates. Where it is found that the incorrect amount of tax was deducted from the employee (or an incorrect SDL amount paid over), a letter will be issued, accompanied by a file containing a list of the certificates that have failed the SARS calculation.
  • For more information on ETV, please refer to this link on the SARS website
  • Please bear in mind the changes to some of the SARS branch processes in light of the nationwide lockdown and the continued fight to combat the spread of COVID-19. SARS continues to provide updates on their website here. Please contact SARS should you be unsure about what process to follow.

How can we help you?

If you are unsure of any of the information above please do not hesitate to contact us and we will gladly explain the different options in a bit more detail.