The Role of Businesses in Ensuring IRP5 Compliance

 Protecting Your Business: The Necessity of IRP5 Compliance

Issuing IRP5s to your employees immediately makes you compliant with the Unemployment Insurance Fund (UIF) and the South African Revenue Service (SARS), while at the same time protecting your employees and your business. 

To be compliant with SARS an employer needs to do three things: register for correct tax types, submit returns and pay the monthly contributions.

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What information is required by SARS from an employer?

SARS expects every employer to register for PAYE and UIF. Once registered with the South African Revenue Service (SARS), you must deduct Pay-As-You-Earn (PAYE) and Unemployment Insurance Fund (UIF) contributions from your employees' salaries and pay these amounts to SARS monthly. If you salary bill is more than R500 000, you must also register for the Skills Development Levy (SDL). 

The payroll service provider will provide you with the correct calculations to submit to SARS on the EMP201. 

Once the EMP201 has been submitted, an PRN number will be generated by the efiling system for that specific month. This is the number that must be used to make payments, if you're not using efiling to pay SARS.

Employers must submit an EMP501 twice yearly to SARS. This form provides details on the number of employee, total earnings, PAYE and UIF deductions, and employer contributions. Only employers can update this information.

The IRP5 shows an employee's gross income, as well as all deductions and contributions made during the tax year.

Is the IRP5 the same as a payslip?

The IRP5 differs from a payslip as it contains more information of the employer than a payslip. The employer registration numbers for UIF, PAYE and UIF will be shown on it, as well as the SARS source codes for the gross income, deductions and contributions.

This is the information that will be listed on an IRP5:

Full names, surnames and ID number of the employee

Employee Cell number, email address and physical address with postal code

Employee bank details with name of the bank, account number, branch code and type of account

Employer's address

Employer reference numbers for PAYE, UIF and SDL

Employee income received with deductions, contributions and source codes

Who submits the IRP5s to SARS?

Only the employer can submit an IRP5 to SARS. It is impossible for your employee to file an IRP5, unless you've given them access to your efiling profile.

Every South African tax payer must register a profile as an individual. The business then gets added as a portfolio and a tax payer on that profile, if it's a small to medium business.

Only certain people have access to your profile:

• The owner or manager: The person who's legally responsible for the business.

• The public officer (this is usually a director or business partner).

• A tax professional (like a bookkeeper or an accountant or tax advisor).

In many cases, tax practitioners add businesses under their own profiles. This allows them to manage their clients' tax affairs more efficiently, ensuring that all deadlines are met and tax returns are filed correctly. This can also help to prevent errors and reduce the risk of penalties.

The employee has no access to the business profile and can not file or rectify an IRP5; he or she can only receive it from the employer. 

How to check the SARS PAYE  balance of your company?

You can check on your efiling profile, send an sms, call the SARS helpline or go to a branch.

If you don't have access to efiling you can send an sms to 47277. It is a free number and you just have to follow the prompts to get the information,

SARS also suggests that you call the call center but don't hold your breath. Too often, it's a complete waste of time with little spots of good communication and information far and wide in between. There are days that you'll get a brilliant consultant who answers all your questions and solve your issue. Then there are days that you hold for over an hour, only get cut off; or you get an inept and impatient consultant that are totally clueless about how to resolve your issue. Calling SARS is like throwing a dice; you don't know where and how it's going to land.

If you have access to efiling you can log on and click on Returns - Search Correspondence - Request PAYE Notices - Select the year - Continue - Select the period- Submit-Click here to view your statement of account.

The statement of account will open in a new window and you can download and save it. All outstanding balances for PAYE, UIF and SDL will be shown on the statement for each individual month. If you've been paying every month, the balance tax period should be zero. 

If you owe SARS money, you'll see at the bottom of the page how much money is currently due. There will be amounts under 30. 60, 90 and 120 days. This means those amounts are due within those specified days.

How to fix a non-compliant status?

First, you need to check if your business has any unpaid monthly (EMP201) or bi-annual (EMP501) tax returns. If there are any overdue returns, you need to file them as soon as possible.
Any outstanding balances, will show on your statement of account. Unfortunately, you'll need to pay penalties and interest plus the original amount owed for the EMP201 and EMP501. SARS penalises you for every month you didn't submit EMP201.
Don't be disheartened.  This might feel like an overwhelming mountain to you, but remember the most difficult situations can be overcome when you start taking action. All it takes is one step in the right direction with the right professional by your side. 

Even if you find yourself in any of these situations, you can still be helped:

You have payroll but have never submitted PAYE and have no idea what's going on in your efiling profile. And you're petrified of looking.

You have payroll, you have submitted PAYE but you never paid any payroll money to SARS.

You have no payroll. You don't have an efiling profile. You've never registered for PAYE.

You have payroll and you've been submitting the EMP201 every month but you are in arrears with SARS. 

Know that you are not alone. There is always a solution. And you can be helped.

Issuing IRP5 to your employees is part of being compliant in your business. But it takes commitment and the right bookkeeper or accountant to support you on the journey. Once you start on the path to compliance, the peace of mind, that comes with knowing your employees are taken care of and your business is on the right track, will make you feel like a different, happier and more confident person. 

If you're facing similar challenges in managing your finances, I'd be happy to assist you. As an accountant, I can provide tailored solutions to your specific needs. Please feel free to contact me for a consultation at profitsandbooks@gmail.com or +2764 049 03038

Disclaimer

The information provided in this blog post is for informational and educational purposes only. It is not intended to be a substitute for professional advice, including financial advice. While all efforts have been made to ensure the accuracy of the information, errors or omissions may occur. Please consult with a qualified professional for advice tailored to your specific circumstances.   The author and publisher of this blog post disclaim all liability for any loss or damage caused, directly or indirectly, by the use of or reliance on any information contained herein.