Employees Tax Review

Employees Tax Review


With South African experiencing an economic downturn and our Government on an ever expanding program of spending on infrastructure and development projects, an increasing amount of pressure is being put on the Minister of Finance to find the money to make these projects happen. He in turn is looking to the SARS Commissioner to ensure that his well-oiled machine collects the money necessary to meet the budget obligations. Year after year SARS has exceeded its collection targets. They have done so by not only working smarter but also employing well educated people who have devised innovative ways to increase revenue collection.

In the past year, I have seen an upsurge in the number of companies that have been exposed to either in-depth PAYE audits or the feared integrated audits. These audits are extremely stressful as the audits probe into all facets of a business and can last as long as 2 weeks. The more common of the audits is the 1 week PAYE audit. In the past they would shuffle through the payslips looking for calculation errors.

Now they delve into the following areas:

  • The payslips
  • The payroll reports
  • The letters of appointment / contracts
  • The rules of the retirement funds and any other benefit funds
  • The companies policy and procedure manual
  • The businesses cash book / petty cash book
  • All company credit card statements

The results of these audits are frightening. In most cases these businesses end up with a tax, penalty and interest bill running into hundreds of thousands. This comes as a shock to the owners of the business as they generally believe that all is well in their business. In most cases the irregularities detected result from either ignorance of the law or a lack of internal controls. Both of these reasons are not compelling excuses for non-compliance and that is why additional tax of between 20% and 200% is imposed.

The only way to avoid the unpleasantness that comes with an audit is to take the necessary corrective steps as soon as possible. A good review of policies and procedures, salary structures and the various rules and regulations will ensure that an organised, legislatively compliant picture is presented to the auditors. When faced with this picture the results driven auditors are most likely to move on to more deserving victims.

HRTorQue Outsourcing can offer our clients an Employees Tax Review that covers all of the areas mentioned above. A detailed report will then be prepared listing all legislative irregularities, deviations from best practice as well as the suggested remedial actions that are necessary. This report will be presented to the directors / senior management who will have the opportunity to participate in a discussion regarding the remedial actions that have been suggested.

Should you be interested in this service please make contact with Dave Beattie on 031 582 7410 / 082 378 5655 or [email protected]. Dave will promptly send you a proposal covering the cost of this service and explain the process that will be followed.