Be warned! Cancelling your PAYE registration doesn't mean SARS is done with you
If you think getting into the tax system is long and complex, try getting out of it, especially when it comes to cancelling your PAYE registration.
SARS doesn't just let you off the hook when it gets your application to cancel.
A few things have to happen first before it can completely deregister your company.
And we'll tell you about them below.
But first, let's explain the important points about PAYE...
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The only way to account for PAYE, and avoid SARS penalties
You have a duty to register for employees' tax purposes if you pay remuneration to an employee who's liable for normal tax.
According to SARS, the process of deducting or withholding tax from remuneration your employee earns is known as PAYE (Pay As You Earn).
If you register with SARS for PAYE and/or Skills Development Levy (SDL) purposes, you must also register for paying Unemployment Insurance Fund (UIF) contributions.
You must pay the amounts you deduct to SARS monthly. You must do this by completing the Monthly Employer Declaration (EMP201)
If you don't account for PAYE, SARS will hit you with penalties. And it won't just be a small fine. SARS penalties can range up to 200%.
Now let's get to the cancellation part...
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SARS will only cancel your PAYE registration and leave you alone when the following happens
There are two instances when SARS will cancel your PAYE registration.
Cancelling PAYE registration normally takes place from the last day of the tax period in which you stop trading. Only the Commissioner has the power to make the cancellation.
When you apply for it by filling in the EMP123 form; or
When the Commissioner sees you haven't been carrying out your tax duties well.
But, just because you've submitted your request for PAYE registration cancellation, doesn't mean he'll remove you from the system right away.
He'll only completely deregister you when you sort out your outstanding liabilities or when you're done settling all your tax obligations.
Once the process for cancelling is complete, he'll tell you the date the cancellation will take effect.
SARS will only cancel your PAYE registration when you meet all your tax obligations. So don't make the decision to get out of the tax system lightly. Think about it and the consequences that could follow carefully.
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