Companies must prepare for South African Revenue Service (SARS) legislation and reporting requirements expected to come into force next year, says NuQ, a payroll systems software development company. Those that do not meet SARS requirements face compliance issues and an administration nightmare.
NuQ executive chairman Ron Warren says the changes that will affect payrolls relate mainly to the content and frequency of tax filings.
“SARS has given notice that next year, the EMP201 return will have to be made twice a year, and thereafter quarterly. It is even possible that with the introduction of the new social security system, the return will be required monthly. This will mean that payroll systems will need to create tax certificates - but not issue them to employees - more than once a year, with only the final certificates at the end of the year being issued to employees,” says Warren.
This will require payroll systems to ensure the tax certificate number on all certificates issued for an employee in each reporting period is the same. “This sounds easy to do, but it is not that easy in practice. It will require changes in the way the system generates tax certificates,” he says.
In future, extra personal information will be required on tax certificates and companies need to able to capture and reflect that, he adds.
The most far-reaching change is the option for payrolls to allow not just tax certificates, but the associated forms: EMP 501, EMP 601 and EMP 701 to be completed within the payroll system.
“The data must then be converted to XML format, when it can be sent direct to SARS without going through the e@syFile process. SARS will recognise this achievement by awarding such payrolls an official 'compliant' status,” he says.
The difficulty is many employers will find it difficult to determine whether their payroll will be compliant because they will generally be unaware of the new SARS requirements.
“Also, there will be different degrees of compliance, in that some payrolls will probably not cater for the production of EMP 601 and 701 forms, leaving them to be completed manually,” he explains. “Even if they do cater for these forms, they may decide not to change their reporting file formats to XML, which will mean that employers will have to continue using e@syFile. Only if the payrolls do change to XML formats and cater for all the forms will SARS certify the payroll as 'compliant'.”
It is important that an organisation's payroll software uses the latest computer technology to enable it to be completely date driven. “Payroll systems that are not date sensitive will find it difficult to automatically handle the generation of EMP 601 and EMP 701 forms,” Warren concludes.
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