Welcome to this informative blog post on SARS submissions, specifically focusing on EMP501 Reconciliation and IRP5/IT3(a). As a responsible citizen or business owner, it is important to understand the requirements for tax submissions and stay up-to-date on deadlines to avoid any penalties or legal implications. In this article, we will cover everything you need to know about EMP501 and IRP5/IT3(a) submissions, including what they are, when the deadlines are, where to submit them, how to rectify discrepancies, and what to do if you miss the submission deadline. By the end of this blog post, you will have a comprehensive understanding of SARS submissions, ensuring that you meet all necessary requirements and avoid any potential penalties.

SARS SUBMISSIONS DOCUMENTATION 

What is an EMP501 Reconciliation?

An EMP501 reconciliation is a report that reconciles the employees’ tax that was withheld from remuneration to the monthly EMP201 returns declared to SARS for the respective period.

During the reconciliation process, employers also prepare and submit the employee’s tax certificates (IRP5/IT3(a) certificates).

The EMP501 reconciliation is also used to reconcile Employment Tax Incentives (ETI claims). ETI refunds can only be claimed by submitting the EMP501 reconciliations. If the EMP501 reconciliation is not submitted the ETI refund can be forfeited.

 

What is an IRP5/IT3(a) certificate?

An IRP5/IT3(a) certificate is an employee’s tax certificate that discloses the detail of the employee’s remuneration, benefits, and deductions for the respective tax period.

The IRP5/IT3(a) as submitted by employers are used by SARS to prepopulate the employee’s income tax returns. Employers must ensure that the information submitted on an employee’s tax certificate is accurate.

Employee tax certificates must be issued to employees after the annual reconciliation period.

SARS SUBMISSIONS DEADLINES & DISCREPANCIES

When must EMP501 Reconciliations be submitted?

Employers are required to submit EMP501 reconciliations twice a year.  The first submission period is the interim reconciliation period and must be submitted from September to October each year. The interim reconciliation is done for the payroll period from March to August. The second submission period is the annual reconciliation period and must be submitted from April to May of each year. The annual reconciliation is done for the payroll period from March to February.

 

What happens if discrepancies are identified during the reconciliation process?

Discrepancies found during the reconciliation process can be rectified when submitting the EMP501 reconciliation and the remaining liability will be payable to SARS. The employer will be required to provide a reason for any over-or-under statement of declarations. If there is a significant change in the total payroll taxes, SARS may request that the discrepancies be corrected on the monthly EMP201 returns and the EMP501 be resubmitted.

 

Where do you submit the EMP501 reconciliation?

There are 2 submission channels:

  • SARS efiling – This channel can be used to submit EMP501 reconciliations with tax certificates not exceeding 50.
  • e@syFile™ – This channel can be used to submit EMP501 reconciliations, irrespective of the number of tax certificates.
 

What issues may arise?

  • Excessive liability change happens when the monthly liabilities as per the EMP201 returns submitted are significantly more or less than what is declared on the EMP501 reconciliation.
  • Employment Tax Certificate validation – This happens when the information declared on the employee’s tax certificates is found to be incorrect after the validation process.
 

SARS performs the following validation rules on the tax certificates.

 

  • Income Tax Number Verification
  • Verification to determine if the certificate has already been used to assess an ITR12 return
  • Verification of the PAYE/SDL/UIF deductions to determine if the deductions are in line with the salary declared
  • Verification of Tax Directive details
 

What happens if the EMP501 reconciliation is not submitted on time?

By law, an employer is obligated to submit interim and annual EMP501 reconciliations to SARS, which provides information about a particular tax year.

When an employer fails to submit an EMP501 reconciliation on time, SARS may impose an administrative penalty. The penalty will equal 1% of the year’s PAYE liability, which will increase each month by 1% up to 10% of the year’s PAYE liability.

Non-submission of EMP501 reconciliations will also result in the employer’s tax compliance status reflecting as non-compliant.

 

In conclusion, if you are looking for expert guidance and support with your EMP501 reconciliations and IRP5 certificates, we are here to help.  Our team of expert professionals not only offers exceptional service but has a passion to help your business succeed. 

Please send an email to to obtain a quote. Alternatively you can connect with us via our contact form.