Editor’s Note: We sent a separate communication on this issue this month. However, we thought it worth re-publishing as it has the potential to frustrate employees if it is not fixed and they do not have the background.
Please note this is a SARS issue. It is not an issue with your software or your administrators, even though you need the support of these parties to help fix it.
A problem has arisen on the SARS portals (where income tax returns are submitted) that displays the employees IT12 annual return. This only became evident to SARS after the 1st July, and they have spent until yesterday urgently trying to fix it.
The portal is automatically populated with the IRP5 data that we uploaded to e@syfile during employer filing season. However, a SARS programming issue results in an error in the totals in the IRP 5 code 4582. This code represents the total remuneration that is used for the purposes of the allowable deduction for pension, provident and retirement fund contributions. SARS limits the deductions allowed to any retirement funds to 27.5% of this value (per the changes in March 2016). If this code is incorrect it will impact on the allowable SARS deduction for the individual concerned.
More specifically, as currently programmed, code 4582 excludes the totals for travel allowances (3701), travel reimbursements (3702) and company car fringe benefit totals (3802 and 3806). The impact of an understated total will be an under payment of tax. This has to therefore be corrected before a return is assessed by SARS.
This problem does not affect the format of IRP5s as printed and distributed to employees. This is not a payroll problem, it is a SARS problem, but the implications of this will potentially affect all employers in South Africa.
SARS have since corrected their programme and have requested that employers upload all the certificates again on their updated software.
We would therefore recommend you work with your payroll department to do the following:
- Analyse whether the situation impacts your employees
- Communicate with your employees (where you think they might have already submitted their income tax assessments); and
- Arrange to re-upload your certificates to the SARS portal (where it has an impact)
If employees have already submitted their return, and been assessed, they will need to request an assessment “Revision” on eFiling. To ensure that the information is updated correctly they will need to do an IRP5 ‘refresh’ to ensure that the corrected certificate is pulled through and that they are reassessed using the correct information.