I am writing this blog at the right time where many employers are already in the middle of preparing their monthly payroll run.
The objective of the blog is to breakdown the distinctive features of payroll from an employer and employee perspective.
1. EMPLOYEE – as an employee you do not worry much about the calculations, preparations and monthly submissions. The only activity is the expectations of a payslip, IRP5 with info already populated on the documents. Payslips are issued every month on or before your payday. IRP5 is issued to you by your employer every 12 months. They stipulate your gross earnings, deductions, company contributions and the net amount that transferred in your bank account as a salary.
Deductions such as PAYE, UIF, Medical aid, Provident fund, reflect on the payslip. PAYE – is your tax contributions deducted as per your salary earnings. If you have worked for a company for more than 24 hours, your employer should have registered you for UIF under the company. The contributions, 1% of your salary will be deducted from your salary and be paid to the unemployed insurance fund on a monthly basis. And the employer equally contributes an additional 1 % towards the UIF contributions.
All these should reflect on the payment remittance/ payslip.
2. EMPLOYER – quite a few things are expected from an employer as far as complying with the legislative labour laws are concerned. First, make sure that the company is registered for the statutory taxes, at least UIF and PAYE so that the entity can account for all the employees deducted monies as well as the company contributions. The procedure is performed on a monthly basis.
With regards to the PAYE – your company monthly submissions are processed via EMP201. This is a payment declaration in which the employer declares the total payment together with the allocations for PAYE, SDL, UIF and/or ETI. You file the declarations via the eFiling portal, once submitted the system will generate the payment reference which you will use on your online banking as the reference. That way SARS will be able to allocate the payments accordingly.
Another aspect with regards to the PAYE is the declaration called EMP501 -is a report of all employees ‘earnings, which must be submitted to SARS. Employers are required to reconcile the payroll taxes liabilities (PAYE, SDL and UIF) declared monthly on the Employer declarations (EMP201). The reconciliations must be submitted twice during a financial year: every six months period.
The EMP501 enables the employer to also generate the IRP5 for the employees so that they can use it for their own submissions when the individual tax season opens.
To read more on the above please visit the sars website http://www.sars.gov.za
Compiled by Ms. Dikeledi Seoloane – Accountant, Tax Practitioner and Owner at Matsobanemetja Business Consulting – The Accounting Firm
http://www.matsobanemetja.co.za
Matsobanemetja Business Consulting Pty Ltd 