Importance of the Payroll Administrator
Most business owners are aware of the size of their payroll expense and pay a lot of attention to providing for the cash flow and managing it as an expense line item. Strangely though the administration risks surrounding this expense are often ignored and the controls are assumed to be sufficient – you do so at your peril!
In today’s highly technical legislative environment, your payroll administrator needs to ensure that the ever changing legislative amendments and their implications have been considered in your company’s payroll – a blind reliance on data capturers capturing hours/remuneration and trusting a payroll software to compute and address the required employee’s tax obligation could land you in hot water with SARS.
It is critical that the relevant sections of the Income Tax Act (‘the Act’) are applied correctly and that a knowledge and understanding of payroll procedures and SARS systems is applied to ease the burden that SARS is increasingly pushing on to employers to administer the relevant sections of the Act.
Very importantly, the meaning of “employee” in terms of the Act and Labour Law needs to be understood to reduce all the risks associated with the incorrect application of the definition, when reviewing salary structures and their various tax implications, for example “travel allowance” and “company car”. By merely relying on pre-programmed software to make these decisions, the risk of the employee’s tax being incorrectly calculated and the employer being charged large penalties by SARS (200% penalty) is increased.
To limit your risk in this area where SARS PAYE audits are becoming more and more common place, your payroll administrator must have sufficient knowledge to understand the various tax principles that apply to your business and be able to make decisions that will withstand any SARS audit/review. We offer a comprehensive payroll bureau solution for your needs that is managed by a highly qualified tax professional with many years of experience in the field. We strongly urge you to take advantage of our expertise in this area as it will save you costs and administrative nightmares. For more information, please contact Juanita Roman at our offices on (021) 683 4834.
Should you require any further information, please do not hesitate to contact us.
All material subject to our Legal Disclaimers.