Employer Interim Reconciliation

In the past SARS required the Employer Reconciliation to be done every twelve months. A few years ago SARS introduced the Employer Interim Reconciliation in addition to the annual Employer Reconciliation.

The Employer Interim Reconciliation have the same requirements as the Employer Reconciliation, with two exceptions:

1. The Interim Reconciliation is completed for six months only, and

2. The tax certificates generated during the Interim Reconciliation are only submitted to SARS and not distributed among employees, except in certain circumstances as set out in the table below.

The major benefit of performing the Employer Interim Reconciliation is that it decreases the pressure on employers with their Employer Reconciliation at the end of the tax year, as only six months have to be reconciled for each reconciliation.

The table below shows the major differences between the Employer Interim Reconciliation and the Employer Reconciliation for the tax year commencing 1 March 2016, followed by some tips on how you can prepare for the next Employer Interim Reconciliation.

Requirement	Employer   Interim Reconciliation	Employer   Reconciliation
Periods included for 2016/2017 tax year	1 March 2016 – 31 August 2016 (6 months)	1 March 2016 – 28 February 2017 (12 months)
Submission deadline for 2016/2017 tax year	31 October 2016	To be announced by SARS (normally 3 months after the end of the tax year i.e. 31 May 2017)
Failure to submit or late submission	Penalty of 10% of total amount of Employees’ Tax per month that employer fails to submit a complete reconciliation	Penalty of 10% of total amount of Employees’ Tax per month that employer fails to submit a complete reconciliation
Failure to indicate taxable fringe benefits on employees’ tax certificates	Penalty equal to 10% of the cash equivalent of the taxable fringe benefit	Penalty equal to 10% of the cash equivalent of the taxable fringe benefit
Give IRP5/IT3(a) certificates to employees	No, except if the employee stops working for the employer e.g. if the employee resigns or retires, or if the employer closes down its business between 1 March 2016 and 31 August 2016	Yes, but only after an acceptable Employer Reconciliation has been submitted to SARS
Deadline for giving IRP(5)/IT3(a) certificates to employees	Not applicable, except if the employee stops working for the employer during the period from 1 March 2016 to 31 August 2016	To be announced by SARS but after submission deadline for Employer Reconciliation and usually before opening of tax season for individuals

Tip 1: Start preparing now

Get a jumpstart on the reconciliation process by starting to confirm employees’ personal details. Draw up a confirmation form of personal details needed to complete employees’ IRP5/IT3(a) tax certificates. These forms should be completed and signed by each employee and kept in the Employer Interim Reconciliation file as part of the working papers. The details that must be confirmed with employees are the following:

1. First two names and surname
2. Date of birth
3. South African ID number or Passport number and name of country which issued the passport
4. Income Tax reference number
5. Contact details:
6. Postal address
7. Residential address (including postal code)
8. Cellphone number
9. Home telephone number
10. Work telephone number
11. Fax number
12. E-mail address
13. Banking details:
14. Bank account number
15. Bank account name
16. Type of account e.g. savings or cheque
17. Branch name
18. Branch number
19. Indication of whether it is their own bank account, a joint bank account or a third party bank account

Tip 2: Use the latest version of easyFile

Make sure that you use the latest version of easyFile when doing the Employer Interim Reconciliation as well as the Employer Reconciliation, as reconciliations and tax certificates done on previous versions of easyFile software will be rejected by SARS. Check the SARS website for updates and the most current version of easyFile software.

Employer reconciliations don’t necessarily need to be a nightmare. Some timely preparation will go far to make the reconciliation process smoother and less stressful.

If the above article raised any questions in your mind please do not hesitate to contact our office. We look forward to the opportunity to assist you.

Reference List:

• www.sars.gov.za

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.