PAYE Administrative Penalties update

PAYE Administrative Penalties update

Business, Human Resources

During June 2021, SARS introduced the concept of administrative penalties in cases where employers failed to submit EMP501 reconciliations on time. Phase 3 of this three-phase process will be implemented by SARS from the 23rd June 2023. This phase includes:

Admin penalty imposition

If the total amount of employees’ tax deducted or withheld, or which should have been deducted or withheld for the period described in subparagraph (3) is known, the Commissioner may estimate the total amount based on information readily available and impose the penalty under subparagraph (6) on the amount so estimated.

Admin penalty adjustment

When determining the actual employees’ tax of the person in respect of whom the penalty was imposed under subparagraph (7), it appears that the total amount of employees’ tax was incorrectly estimated under subparagraph (7), the penalty must be adjusted in accordance with the correct amount of employees’ tax with effect from the date of the imposition of the penalty under subparagraph (6).

It is important to note that the effective date of the enhancement of the admin penalty imposition and adjustment will be from the date of promulgation, namely the 19th January 2022. These legal changes will accordingly not be applicable to any reconciliation period prior to the 19thJanuary 2022, and will therefore take effect from the reconciliation period 2022 02 and onwards.

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