How long should your Tax Year-end submission take?
The tax year-end starts on the 1st of March every year. SARS has included a Bi-annual submission for the first six months that is due by the end of October. The tax year ends on the last day of February and businesses have till the end of May to submit their final EMP501.
The above is a constant that businesses are fully aware of therefore the preparation starts before the tax year does. SARS and payroll solution providers have made this process so much easier for businesses than it has ever been in the past. This process can be fully electronic if businesses choose to align themselves with a Payroll solution that is compliant and maintained by the solution provider.
First step for preparing for Tax Year-end
So the first step in preparing for your Tax year end submission process is to choose a Payroll Solution that maintains compliance and do that before the start of the Tax year.
Often some businesses only realize that their employee’s information is incomplete at the time of submission and these affected employees may no longer be employed by the business. This could result in a late submission, non-submission or even a submission with incorrect information. Take note of the related penalties or a possible SARS audit.
In total, the penalty is to the maximum 10% of the total amount of Employees’ Tax deducted or withheld (or which should have been deducted or withheld) by the employer during the year. Late payment penalties are levied as a once-off charge of 10% of the tax that should have been paid by the due date including interest.
So the next step is to ensure that you receive and upload all the SARS required employee information onto your payroll system as part of your employee recruitment and on-boarding process.
The EMP501 or Tax year-end submission is a reconciliation of all your monthly EMP201 declarations and related payments. Now, if you ensure that you declare and pay in accordance to your payroll system then your EMP501 reconciliation will balance. Should there be a need for an adjustment then you must adjust your payroll system either via the next payroll interval or an additional run. It is advisable that you do not do any manual adjustments.
The bi-annual submission forces businesses to reconcile the first six months and therefore streamlines the Tax year-end submission process. Once you have processed your final interval in February and run your tax year end then you should extract your exception report and update the system accordingly. Once that is done then you are ready to extract your electronic tax file for import into E@syfile.
The SARS tax season opens on the 1st of April. Please download or update your E@syfile software with the latest version. Import your electronic file into E@syfie and reconcile your payments and ETi fields if applicable then submit it via E-Filing. If all of the above is in place and in order then your Tax Year-end submission process should not take you longer than fifteen minutes.
For more information on the above topic, please contact the LabourNet Helpdesk at
0861 LABNET (0861 522638).
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