What are employee tax certificates?
It's an employee's proof to SARS that she earned certain remuneration and that she paid the required taxes over to SARS.
You have to provide the following information on your employee certificates, otherwise SARS will reject them and penalise you.
Give SARS this mandatory information on your employee tax certificates
#1: Transaction year: This is the year in which you deduct and pay employees tax on an employee's remuneration. This includes your employees' tax accrued during a previous tax year, says the Practical Tax Loose Leaf Service.
#2: Year of assessment: The year in which the income accrued to the employee. Your company reconciliations (yourEMP501 forms) will be generated based on Year of Assessment.
Keep in mind that where the Year of Assessment is earlier than the Transaction Year, you must complete an EMP701.
In other words, if the accrual for your employees' tax fell in a previous year, you must file the EMP701.
#3: Period of reconciliation: This is the year and the month that concludes the relevant reconciliation period.
#4: Certificate number: You have to issue a unique number for each employee tax certificate. SARS has increased this field from 13 to 30digits.
The Practical Tax Loose Leaf Service explains that the format is as follows: 10 digit PAYE reference number of employer, followed by the transaction year and then a unique identifier which may contain numeric and alpha characters.
For example, if certificate no 10000001 has been issued for PAYE reference number 7990799999 and year 2009, the certificate number will be: 799079999920090000000010000001.
#5: Employees' addresses in a defined format: You must follow the formal address structure that's used nationally.
#6: Banking details are compulsory: You have to provide your employees' banking details on the new IRP5/IT3 (a) certificates to SARS.
The reason is that SARS wants to validate the bank details that taxpayers have provided on their tax returns against the IRP5/IT3 (a) to ensure accurate and seamless refunds.
#7: An income tax reference number is compulsory: You won't be able to submit your IRP5/IT3 (a) certificates to SARS unless you have a tax number for all your employees.
#8: For SA citizens, an ID number is compulsory: You won't be able to submit an EMP501 without an ID number or at least a passport number.
#9: Don't forget to include tax directive numbers
Well there you have it. With this mandatory information on your employee certificates, you can be sure SARS won't reject them and penalise you.