By 31 May 2016, you must submit your Employer Reconciliation (EMP501) to SARS.
And on 1 June 2016, SARS will be sending out penalty notices to employers who've:
• Failed to submit the form
• Submitted it late, or
• Whose EMP501s don't balance.
Although hundreds of businesses get fined each year, the truth is, it's not difficult to avoid the penalties. Here's how to do it...
You might get this from SARS for free but ours is better
SARS has a free guide on how to complete your ITR14 – the income tax return for companies. But have you seen it? There are only two pages telling you what you need to do.
It doesn't go through each page of the return and what you need to look out for. It doesn't highlight potential problem areas. Or show you the red flags you need to watch out for. SARS doesn't mind if you get your return wrong. It just means more money for them at the end of the day because it will open you up for additional audits.
But we have a full report on how to complete each section of the return so you'll never face unnecessary audits.
Get your copy here
Spot these errors BEFORE SARS does
Make sure you've set aside enough time to complete the form correctly.
Double-check it, to make sure everything balances (we'll explain this in a minute!).
Submit it on time.
Your EMP501 is called a 'reconciliation' because you use it to reconcile all the information you've submitted to SARS on the EMP201s (monthly reconciliations), between 1 March 2014 and 29 February 2016.
When SARS gets your EMP501, its systems scan through all your EMP201s to check that everything matches up. It also checks your employee income tax certificates against the EMP501.
So make sure the figures on your tax certificates and EMP201s match the figures on your EMP501, BEFORE you submit it to SARS.
Use the EMP701 to make corrections and stay on the safe side of penalties
Perhaps since you submitted an EMP201, your circumstances have changed. Perhaps an employee resigned or was retrenched, or the company paid a lump sum out to someone…
The question now is, how do you avoid being penalised for the mismatch on the EMP501?
7 reasons why you want to get your hands on the March update to the Practical Tax Loose Leaf, today!
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How buying a car on a maintenance plan can shrink fringe benefit tax to just 3.25%
A clever (but completely legal) method to use depreciation to shrink an employee's tax bill
How to calculate your CGT liability in just 5 easy steps
What CGT can do to a small business – the effects can be devastating
What every provisional tax payer MUST KNOW about CGT
Travel Allowance vs. Reimbursive Travel Allowance? When to use each one AND keep SARS happy
3 Travel Allowance errors you MUST avoid to escape costly penalties and audits – and how to get yourself out of trouble if you've already made any one of them.
, and the March update is yours!
If you want to correct an error before you submit your EMP501, simply file a correction of the EMP201 form for the affected month. Then continue filing your EMP501.
If you discover an error after submitting your EMP501:
1. File a correction of the EMP201s that bear the error.
2. Submit an EMP701 form, to correct the EMP501.
Powercuts and PC problems won't get you off the hook
I've heard the sad story of the bookkeeper who left it 'til the 11th
hour, only to be hit with power cuts that prevented her from submitting the EMP501 on time.
If you find yourself in this dilemma, you can object to the penalties. After all, power cuts are outside of your control. And you (hopefully) weren't intentionally trying to avoid your tax responsibilities.
But even so, you have to complete and submit an objection form to SARS, and then wait for a response.
There's no guarantee SARS will side with you. And if it does, your penalty may be waived. But not the interest on it.
So you'll lose money to SARS anyway!
With 8 weeks left before the submission deadline, now's a good time to get your tax affairs in order and put these pointers into practice.
Product Manager: Tax
P.S. We've got some hot IRP5 tips on their way to you soon!
The next Practical Tax Loose Leaf
update is on its way to subscribers soon! And in it, you'll find out about:
The 3 types of employee tax certificates and when to use them
The 5 situations when you must issue an employees' tax certificate
The mandatory info you MUST include on your forms, so SARS doesn't reject your tax certificate
You must submit your tax certificate electronically – here's how.
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