ETI – SARS Challenges Continue

ETI – SARS Challenges Continue

Payroll / eTorQue, Tax

Editor’s Note: The issue below is causing real difficulty for employers and outsourcers alike. For the outsourcer, it is sometimes difficult to explain to a client that despite submitting everything correctly, SARS systems are rejecting ETI claims. This is particularly difficult when ETI claims are usually material and the first time the client finds out about it is when they get an assessment for a large sum of PAYE plus penalties and interest.

ETI submissions to SARS in August 2016 were a nightmare for employers. Incorrect validation checks in the SARS E@syFile system resulted in multiple ETI submissions being rejected and assessment notices sent to employers to repay millions of rands in ETI plus penalties and interest.

SARS assured us these had been resolved for the February 2017 submissions and we hoped this would be the case. Alas this was not to be.

Feedback from our own experience and those of the Payroll Authors Group Members give the following examples of challenges experienced:

  • Validation checks that were supposed to be removed have continued to throw up some rejections of submissions;
  • If employees are included with wages below the threshold e.g. R1,900 compared to R2,000, even if no ETI is claimed the submission has been rejected;
  • Where employees turn 18 near the end of the month and ETI should be validly claimed the whole ETI claim has been rejected because the birthday is “too late in the month” (sic);
  • ETI has been rejected for unallocated payments on statements of accounts going back as far as 2003 tax returns. This has been made more difficult by SARS local branches inability to help with allocations.

The rejection of the claim is accompanied by an assessment for the full PAYE (against which the ETI was claimed) together with interest and penalties. Even when corrections to the issues above are submitted the employer still needs to go through the separate, arduous process of appealing the interest and penalties.