2013 Annual Employer Reconciliation Season

SARS announced that the 2013 annual employer reconciliation season will take place from 01 April 2013 to 31 May 2013. During this period, all employers must reconcile and submit PAYE, UIF and SDL contributions for the period 01 March 2012 to 28 February 2013.

SARS requires employers to submit accurate and complete employee tax certificates and a reconciliation of contributions for the year. Failure to submit, late or inaccurate submissions or reconciliations that do not balance will incur penalties imposed by SARS.

 

To download the notice issued by SARS, please access http://www.sars.gov.za/home.asp?pid=326&toolid=65&itemid=82949

14 Comments

Filed under General, HR, Industry Information, Legislative Updates, Partner Payroll

14 responses to “2013 Annual Employer Reconciliation Season

  1. Hi Madelein, I need assistance with loading Employee benefits on pastel payroll. They are Life Cover and Disability Cover which is and Employer only contribution. I have created two transactions on pastel for the above. I just need to check that the transaction codes link with the correct tax codes. eg. 3801 tax code for Life Cover and 4018 for Disability. I also need to know whether the employee benefits should affect UIF employee and employer contributions

  2. Madelein van der Watt

    Hi

    You need to process the following transactions:

    The amount paid by the employer must be processed as a Company Contribution. You can create a new transaction linked to Template 9300 Sundry Contribution.
    The same amount must be processed as a Fringe Benefit.
    If the policy is owned by the employer, the benefit is classified as an acquisition of an asset at less or no cost to the employee. The amount paid by the company less any contribution made by the employee must be processed using transaction code 6000 which updates SARS code 3801.
    If the policy is owned by the employee, the benefit is classified as a payment of employee’s debt and must be processed using transaction code 6140 which updates SARS code 3808.

    The same will apply to Disability cover unless it is classified as an Income Replacement policy, in which case the company contribution must be processed using transaction code 9401. The fringe benefit value must be processed using transaction code 6401 and a tax deductible amount must be allowed using transaction code 7201.

    Regards

    Madelein

    • Hi Madelein
      Thank you for your prompt response. However, I’m a bit confused. This policy is a Company owned policy. The only portion that is deducted from the employee is the fringe benefit tax, which comes from the Life Cover. I’m not sure whether the Disability cover is classified as an Income Replacement Policy. Please help!

      • Madelein van der Watt

        Hi

        Without assessing your policy documents I can’t provide you with an exact answer. I can refer you to a previous post where I discuss the legislation in detail – https://pastelpayroll.wordpress.com/2012/04/03/understanding-the-taxation-of-employer-paid-insurance-policies/

        If you still cannot determine the exact nature of the policies, please speak to your broker or contact a tax consultant or SARS to assess your specific situation.

        Regards

        Madelein

      • Hi Madelein
        I need your assistance with medical aid. Our medical aid contribution forms part of the total package. We reduce the employees salary by the medical aid contribution, therefore it is defined as a company contribution. The medical aid contribution reflects on the payslip under the code 6172- medical aid fringe benefit and 9090 – company contribution. Both these transactions are linked to the following tax codes:
        6172 – linked to 3699(gross remuneration),3810 (medical aid),4005(med aid contribtion) and 4497 (total deductions/contributions)
        9090 – linked to 4474 (medical aid contr), 4497 (total deductions/contributions)
        When it is reflected in this way on the IRP5 it doubles up the medical aid contribution.
        I’m not sure whether all these tax codes are correct.

      • Hi Madelein
        With regards to the Disability and Life Cover, you mentioned that the amount must also be processed at Fringe Benefit. Which Pastel transaction code would I use, as the 6172 code is used for medical aid.

        Thanks for all your help.

  3. Madelein van der Watt

    Hi

    The medical aid contribution is not doubled on the IRP5. The IRP5 validation rules state that an employer contribution is also deemed an employee contribution, therefore the value reflected in code 4474 (employer contribution) should be included in 4005 (employee contribution) as well. SARS validates that code 4005 is greater than or equal to the value of code 4474. If only the company contributes, code 4474 and 4005 should be equal. If both the employer and employee contributes, code 4005 should be greater than code 4474.
    When SARS refers to the medical aid contribution value, they will only refer to code 4005 and not 4474.

    Regards

    Madelein

    • Madelein van der Watt

      Hi

      If the policy is owned by the employer, the benefit is classified as an acquisition of an asset at less or no cost to the employee. The amount paid by the company less any contribution made by the employee must be processed using transaction code 6000 which updates SARS code 3801.
      If the policy is owned by the employee, the benefit is classified as a payment of employee’s debt and must be processed using transaction code 6140 which updates SARS code 3808.

      Regards

      Madelein

      • Hi Madelein
        As per our last discussion regarding employer owned Life Cover and Disability. I have set up the necessary codes as per your last note to me. I’d like you to please take a look at them and let me know if it is correct:
        I have set up two company contribution transactions:
        1. Life Cover – linked to template 9300
        2. Disability – linked to template 9401 (classified as Income replacement policy)

        Then I set up the benefit transactions as follows:
        1. Life Cover – linked to code 6000
        2. Disability – linked to code 6401
        Should there be any other codes created. I just want to make sure that the tax calculates properly and that the correct SARS codes are linked.

        Thank you

  4. Madelein van der Watt

    Hi

    Your setup sounds correct. Please ensure that you process the correct amounts in each of your new transactions to ensure the correct result. Also remember to process code 7201 to give your employee the tax deduction he is entitled to on employer paid income protection policies – the amount processed on code 9401 qualifies as a tax deduction, provided the same value exists in transaction 6401.

    Regards

    Madelein

    • Hi Madelein
      I have entered code 7201 and I have tested the tax calculation. It all looks good to go. Thank you so much for your assistance.

    • romyvurden

      Hi Madelein
      With regards to my correspondence above, I need your assistance once again. I am currently preparing my Biannual submission for SARS and the exception report requires that the Life Cover and Disability codes needs to be allocated as a RFI or NRFI. could you please help me with allocating these transactions correctly.

      • Madelein van der Watt

        Hi Romy

        The transactions you linked to codes 6000 and 6401 for Life Cover and Disability, which are taxable Fringe Benefit amounts, are included in Gross Remuneration and must therefore be specified as either Retirement or Non Retirement Funding Income.

        If these amounts were included in the calculation of a pension or provident fund contribution, set them up as Retirement Funding Income. This is not very likely so I guess they should be included in Non Retirement Funding Income.

        Regards

        Madelein

      • romyvurden

        Thank you Madelein.

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