2008 Tax filing season – what does it mean for the employer and individual taxpayer?

SARS has recently announced dramatic changes to both IPR5 reconciliation and submission processes, which places more responsibility on the employer than in the past. We summarise the changes for you as the employer and for the individual taxpayer for the 2008 filing season:

For Employers:

• Employers will now provide SARS with the information relating to each employee in electronic format – both the IRP5/IT3(a) and EMP501 reconciliation must be submitted to SARS before the employee would be allowed to submit his return.
• SARS will issue the software (free of charge) to enable the employers to do the electronic submission to SARS – this will be available from 1 July 2008 on SARS website and the local SARS branch offices. This 60-day window (being 01/07/2008 to 29/08/2008) will allow sufficient time for all employers to submit the required information to SARS – this replaces the manual submission process we have been used to in the past.
• Should you have prepared manual IRP5/IT3(a) certificates, you would have to capture them in the new software and submit these to SARS along with the EMP501 reconciliation.
• An electronic payroll (e.g. VIP or Pastel Payroll) would provide you with the necessary information just to import directly into the new software – no re-capturing required! (Please contact our tax department for a quote regarding our payroll services).
• Please note that SARS has warned that employers who fail to comply with the deadline will face strong penalties – up to 10% of the total PAYE for the year.
• Dates to remember:
  • 1 July 2008 – SARS releases software for IRP5 and EMP501 reconciliation submission
  • 29 August 2008 – Deadline for submission of IRP5 and EMP501 reconciliation to SARS

Please contact the relevant partner or our tax department to schedule a consultation to assist you with the new submission process.

For Employee/individual taxpayer:

• Taxpayers will now have to request their tax returns from SARS (they are not being sent automatically as in the past) – based on the information provided to SARS, you will receive a customized return according to your personal requirements. Requests for returns can be done via e-filing, visiting a SARS branch office or calling 0860 12 12 18.
• Due to the new electronic format of IRP5 submission by the employers, you will now receive a pre-populated Personal Income Tax return (PIT) from SARS based on the information submitted by your employer. Taxpayers can then just verify their information and complete the remaining relevant sections of the PIT form, sign it and submit to SARS.
• Certain taxpayers who earn below R120 000 per year, and work for a single employer (and do not earn any other income e.g. rental) will not be required to submit an annual tax return to SARS.
• Dates to remember:
  • 1 September 2008 – Filing season opens and taxpayers can request their returns from SARS
  • 21 November 2008 – Deadline for MANUAL submission of your PIT
  • 23 January 2009 – Deadline for ELECTRONIC submission of your PIT

We suggest that any tax profiling requirements relating to the 2008 tax year be reviewed and finalised before the electronic submission to SARS – SARS has warned that any subsequent changes will not be allowed. Please contact the relevant partner before 31 July 2008 to assist you with this exercise.

As SARS has indicated that the 2009 filing season would commence on 01 March 2009 for its 60-day window period, we also suggest that the 2009 tax year IRP5’s be reviewed for tax efficiency purposes before 30 November 2008 – please contact the relevant partner in this regard.

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