Prepare yourself for these 11 difficult questions
Many employers are confident they're doing nothing wrong until they face these questions. Be warned, these are 11 of the most difficult question posed . Put just one foot wrong and you'll be left sweating blood in front of the SARS audit team.
1. Have any of your employees concluded more than one employment contract?
Where this happens, the correct amount of employees' tax is rarely withheld.
2. Are all payments made to your employees (in connection with services) processed through the payroll-system?
SARS knows the most critical mistake made by many employers is the payroll division not knowing all the transactions processed by the finance division. This gap in internal control usually results in painful consequences.
3. Has the company or the fund-administrators made any changes to the fund rules governing the member and/or employer contributions during the last 5 years? If any of these rules have changed, give a brief description of the fund involved and the broad nature of the changes to the rules made.
There are surprisingly many employers who changed fund rules but didn't bother to amend the contracts of employment. The exposure can be more than what you bargained for!
4. Does the medical aid fund pay for any non-medical expenditure, such as gym fees or sunglasses?
Where your medical aid doesn't have its ducks in a row, SARS can claim that a taxable benefit arises in the hands of your employees.
5. Are employees able to make 'top-up' payments to any fund, scheme or medical aid by way of salary sacrifices?
SARS will look at your remuneration committee minutes, and remuneration policies, to ensure there is no mention of salary sacrifice.
6. Has any employee been paid a subsistence allowance on a salary-sacrifice basis?
This practice was rife some years ago and despite SARS' repeated warnings that this was no longer allowed, some employers persist.
Read on for the other 5 other difficult questions
3 Internal controls you need to prevent payroll fraud
New ways of defrauding your business are created every day. There's a 50% chance your company's already a victim and you don't even know it!
You need controls for journals, invoices, receipts, inventory, production, purchases, sales reconciling of accounts, processing of documents… The list goes on and on.
And I'm sure you have measures in place for all of these.
But how sure are you that you have controls in place for your payroll?
Here are 3 internal controls you can implement today to prevent payroll fraud and keep mistakes at bay.
7. Does any part of your remuneration structuring rely on 'reimbursive' payments or allowances?
Everyone used to do this but it shouldn't be happening any more.
You can reimburse employees but make absolutely sure you're taxing these correctly!
8. Please furnish a brief description of the manner in which individual employees' motor vehicle allowances are calculated.
Determining motor vehicle allowances as set amounts per grade usually results in some degree of tax exposure.
9. Do employees' spouses travel together with your employees on business trips?
This is so simple for SARS to attack and yet so many employers think they're smarter. Here's how it goes: The executives arrange their next business trip in Mauritius and the wives go along.
The executives convince themselves that the purpose of the trip is business and the wives are attending for work-social purposes.
10. Do you award any of your employees prizes, achievement-awards or gift vouchers?
Innocently enough, employees are rewarded with a lunch or a small gift of appreciation for a job well done. But there are tax consequences!
11. Were any of the contractors previously employed by the company?
SARS knows these persons are usually still subject to your supervision and control. Where they are, they are your tax obligation.
Ensure your company is prepared when this questionnaire lands on the desk. Prepare yourself by completing it on a mock basis first.
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