The South African Revenue Service (SARS) requires that employers must, every six months, submit an Employer Reconciliation Declaration (EMP501).

The interim reconciliation covers the six-month transaction period 1 March to 31 August 2016 and must be submitted to SARS between 1 September and 31 October 2016.

The EMP501 is important as it is a means of confirming or correcting the payroll tax amounts which have been declared on the Monthly Employer Declaration (EMP201).

  • The EMP201’s must reconcile to payments made for the period.
  • The EMP201 payments must reconcile to IRP5/IT3(a)s generated.

SARS has requested that employers accurately verify and update each employee’s personal and financial details before submitting the EMP501 and employees’ Income Tax Certificates. Incorrect information means that tax certificates have to be re-submitted to SARS, a time consuming process.
Tax certificates must be issued to employees at the end of each tax year, but this is not a requirement at mid-year.

The following legislative and system changes relating to the 2016 Employer Interim Reconciliation should be noted:

  • From 1 March 2016 contributions to Pension, Provident and Retirement Annuity Fund are deductible for payroll taxes.
  • New source codes (3817, 3825, 3828) have been created to differentiate between Pension, Provident and Retirement contributions and new source code (4582) to indicate the total value “remuneration” portion where the source codes allow a 20/80 split.
  • Medical expenses tax credit for people over 65 years who are still employed have been introduced.
  • A new source code (4120) has been created to capture the additional medical expenses tax credit for employees over 65 years.

As from the 19th of August 2016, employers who are subject to an audit can now view the audit letters on the SARS website: eFiling and e@syFile.  Employers can now also upload supporting documents in response to the audit letters or submit a request for correction of the EMP201 or EMP501.

Copies of all declarations submitted together with any supporting documentation must be kept for five years.