It has become evident that the ever-increasing complexity resulting from legislative changes makes PAYE a soft target for the South African Revenue Service (SARS). This statement is supported by the recent increase in the number of PAYE audits conducted by SARS.
We often ask organisations when last they reviewed their payroll to determine whether all benefits are included and taxed? In cases where additional benefits have been provided to employees, or new remuneration structures implemented, have the various departments liaised effectively to ensure that the structures are legislatively compliant and then correctly implemented into the payroll? The most common answer received is that the organisations are satisfied with their position because they have audited financial statements. This belief is a common misconception as the ‘audit review process’ very seldom dedicates any time to salary and PAYE issues. Where a limited review is done, it is often done by an inexperienced first year auditor unable to do a manual tax calculation, never mind interpret complex legislative issues.
With the provisions in the new Tax Administration Act making ‘lack of due care and attention’ regarding tax issues subject to additional penalties of 50%, it certainly provides an incentive for business owners to invest more time and resources to ensuring legislative compliance. These reviews will determine whether current legislation is being applied, identify areas of risk and then provide the options that are available in terms of corrective action which will limit potential additional tax costs.
At HRTorQue Outsourcing, we have an Employees Tax specialist who can assist you in performing these suggested reviews. Should you have any questions in this regard please refer them to Dave Beattie on 031 582 7410 or [email protected].