The deadline is approaching for all employers to submit their payroll information to SARS by submitting the annual EMP501 reconciliation.
An EMP501 reconciliation is a report of all your employees’ earnings, which must be submitted to SARS. Employers are required to reconcile the payroll taxes liabilities (PAYE, SDL and UIF) which is declared monthly on the Employer declarations (EMP201). It is the employer’s obligation to deduct and declare the correct amount of employees’ tax from the employee’s remuneration each month and pay this over to SARS on a monthly basis.
During this period, employers are required to submit their annual reconciliation declarations (EMP501) that reflect accurate and the latest payroll information about their employees, monthly employer declarations (EMP201) for PAYE, UIF and SDL, payments made and employee tax certificates (IRP5/IT3(a)s generated, covering the full tax year from 1 March 2023 to 28 February 2024.
The three elements that must reconcile in order for your submission to be successful are the:
- Monthly Employer Declarations (EMP201s) submitted (Pay-As-You-Earn (PAYE) and/or Skills Development Levy (SDL), Unemployment Insurance Contributions (UIC) amounts due and Employment Tax Incentive (ETI), if applicable)
- Payments made (excluding penalty and interest payments)
- IRP5/IT3(a)s generated – PAYE, SDL and UIC values.
The annual reconciliation submission period for 2024 will be run from 1 April to 31 May 2024.
EMP501 reconciliations are due twice during a particular financial year:
- Interim period – six-month period 1 March to 31 August (Due 31 October)
- Annual period – full tax year period 1 March to 28/29 February (Due 31 May)
The importance of capturing the correct PAYE liability each month on the EMP201 returns is very important, as SARS has indicated that they will impose penalties and interest on incorrect calculations, including corrections done on the EMP501 reconciliation and late or incomplete reconciliations.
Should you require assistance with your annual EMP501 reconciliation, CMV Accountants can help you stay compliant.
