Withdrawal of Article “The Consequences of Tax Reference Numbers being required for all Employees” and apologies to SARS
Following discussion with Sars, I have been shown that my interpretation of guidelines and review of the actual circumstances of the application of the Act, is incorrect and therefore I tender my sincere apologies to All.
In an attempt to convey the correct interpretation and provisions of the Act, I have re-drafted the Article to align with the Act and Sars views as stated per correspondence.
Registration of Employees:
The provisions of section 67 requires any person who becomes liable for any normal tax or required to submit a return as envisaged in section 66 to make application for registration. However, those Employees who only earn ‘net remuneration’ to which SITE applies (s 67(2)) do not need to make application.
Therefore those Employees who are not liable for normal tax or who earn ‘net remuneration’ are not required to make application for an income tax reference number, however, Sars are not prohibited from registering any class of Employee.
Duties of the Employer:
Following the process of Reconciliation of remuneration and disclosure of employees tax on the annual and bi-annual returns the duties of an Employer in terms of the Act in so far as disclosure of the income tax reference number of the Employee are confirmed in terms of para 14(1)(c) of the Fourth Schedule and section 69(2)(a)(i), which in the first instance requires the Employer to disclose the income tax reference number where the Employee is registered in terms of section 67 and secondly, requires the Employer to furnish the income tax reference number, if that number is available.
Accordingly, an Employer is required to furnish the income tax reference number on the IRP5/IT3A in circumstances where the Employee is registered and the number is available.
Penalties for non-submissions of return:
The receipt of IT88’s by Employers for Employees following failure to submit returns will occur in circumstances where section 66 notification by the Commissioner through Gazette Notices (580 of 2010 & 531 of 2011) have not been complied with.
Subject to certain provisions stated in para 3 of the notice, any person who’s gross income for the year of assessment ended 2011 for persons under the age of 65 exceeds R 57 000 and for persons over the age of 65 exceeds R 88 528 are required to furnish a return.
Further para 3(a)(i)(aa) of the Notice, exempts a person from submission of a return if the remuneration paid does not exceed the annual equivalent of R 60 000 (after deduction of allowable contributions to any pension fund and medical fund) and from which only SITE has been deducted.
Para 3(a)(i)(bb), exempts a person from submission of a return if the remuneration paid from a single source which does not exceed R 120 000 for the full year of assessment and employees tax has been deducted from the full amount (after the deduction of allowable contributions to any pension fund, retirement annuity fund and medical fund) in terms of the prescribed tables.
Accordingly, the application of the provisions of section 66 read with the Notice needs to be applied to the Employee to determine if such Employee, even if such Employee has a income tax reference number, whether or not such Employee will be required to submit a return. Any Employee falling outside of the exemptions provided in the Notice may be subject to administrative penalties for non-submission.
Through my experience following my previous Article it is recommended that Employers review the relevant section of the Act, read with the Government Notice to ensure compliance and if assisting staff in determination of the requirements of submission of returns that all material aspects be considered before such decision is made.
All material subject to our Legal Disclaimers.