The employee is the most important part of the business engine. Look after them and they will drive your business forward more than you will ever expect. They can be the greatest asset or the biggest liability. This all depends on how they are treated.
Employee tax returns: Basic tax types
PAYE:
- Pay-As-You-Earn
- Calculated according to the SARS issued tax tables
UIF:
- Unemployment Insurance Fund –
- 1% of gross income.
- 1% paid by employee and 1% paid by employer
- Capped at R 148.72.
SDL:
- Skills Development Levy
- 1% of gross income
- Paid by Employer
EMP201:
- A monthly return submitted to SARS
- Deadline: 7th of the following month (or last working day if a weekend)
- Contents: A breakdown of all the PAYE, UIF and SDL for all employees
- Payment method: Through e-filing, EFT with specific reference number
- Compulsory, penalties can be imposed
EMP501
- A bi-annual return submitted to SARS
- Deadline: Usually (date change) May and November of each year
- Contents: Breakdown of all the EMP201 returns submitted to SARS
- November: for 6 months ending: August
- May: For period 6 months ending: February
- Compulsory, Penalties can be imposed
- Usually no payment
Payslip:
- A record of payment made to an employee for a specific period (usually monthly)
- Shows all types of income and deductions resulting in the nett pay of an employee
IRP5:
- Issued to an employee annually
- Contents: breakdown of all totals on their payslips
- This can be for a full year or part thereof
- Employees can receive more than one IRP5 in 1 year.
- This will appear in the individuals employee tax returns
- These are issued when the EMP501 is submitted to SARS.
- Compulsory – needed by the employee to submit their personal tax.
Although many employees will never see this side of your business, they will track their earnings and subsequent deductions with an eagle eye – and who can blame them? They will talk and they will find out how they are being treated versus the others in their department etc. If they are not being treated fairly, they will talk (A LOT). If you do not catch it early, you will probably hear about this talking too late to make a difference to them.
Here is a list of payroll functions we perform for your company and (indirectly) your employees.
Contact us if you need to appoint a tax consultant. We are here to help you.
This post was updated on 9th December 2020