With pressures mounting for SARS to collect more and more each year, payrolls need to ensure they remain squeaky clean to ensure they are not drawn unsuspectingly into the tax net with massive ramifications.
The below are 3 key tips to ensure your payroll is kept in tip top shape:
1. Ensure your payroll wage elements are correctly taxed and IRP5 codes are accurate
- Following the annual tax budget speech each year, payroll teams should be fully aware of the changes to IRP5 codes and tax treatment of wage types to ensure they do not fall foul to any statutory exposures.
- Payroll teams should also attend regular tax updates and upskill themselves in the form of tax training to provide them with the armour to maintain fully compliant payrolls.
2. Prior year/s tax exposures
- Should an employer become aware of a prior year tax exposure, putting your head in the sand and being ignorant is no excuse for being non-compliant.
- A full-scale re-calculation in the form of an independent audit should be performed to both identify and quantify the statutory exposure for an informed decision to be made.
- The executive team then has a full picture as to whether a voluntary disclosure should be submitted to SARS to remedy these prior periods of non-compliance.
3. Stand-alone tax package structuring tool
- Companies who have incorporated stand-alone tax package structuring tools have the upper hand in performing independent checks to the payroll.
- These standalone tools which are updated to be fully compliant with the latest tax laws and regulations provide a level of comfort supporting both the payroll and HR functions alike.
SARS is always more likely to target a company with the possibility of filling up their coffers rapidly as opposed to chasing after average earning taxpayers which requires so much additional effort, administration and resources on their part.
Where companies fall short on their monthly PAYE submissions, HR and Payroll executives should clearly understand that SARS’ tax collection strategy includes collecting additional revenue through levying penalties ranging from 10% right up to 150% for intentional tax evasion. This has grave cash flow and cost implications to employers which should be avoided at all costs.