By Isaac Moledi
Employers will for the first time play a central role in their employees’ personal income tax system.
Launching the 2008 tax season last week, the South African Revenue Service (Sars) said it would introduce further changes to its tax system for 2008.
These changes will focus on the legal obligation of employers who administer payroll taxes such as pay as you earn (PAYE), Site, Unemployment Insurance Fund and Skills Development Levy (SDL).
The changes will affect the way in which employers submit theiryearly PAYE declarations.
The declarations must reflect deductions made from the salary of employees and whether these have been paid to the revenue service on behalf of employees.
It will also affect the way companies issue IRP5 certificates to employees for a particular tax year and the traditional way in which individuals receive, complete and submit their yearly tax returns.
Sars says the changes will be introduced to make filing a tax return easier for individuals and to provide companies with free, convenient software for automated payroll reconciliations as well as technical assistance.
Sars says it has made a commitment to continually improve service to taxpayers while strengthening the overall integrity of the tax system.
Sars implemented the first phase of the personal income tax (PIT) reform programme last year to provide better service and improve the institution’s ability to detect noncompliant behaviour earlier.
As a result of the last year’s reform, the tax return was redesigned, simplified and reduced to two pages.
Unlike in the past, taxpayers did not have to submit supporting documents to Sars.
Returns were scanned and assessed through an automated process for faster turnaround times.
Sars says its ultimate goal remains to present the majority of individual taxpayers with a pre-populated tax return.
This will take place by transforming the PIT process from the current system in which individual taxpayers provide Sars with a return completed by them with data obtained from third parties, including employers to a pre-populated return.
This relates to individuals with complex tax matters that must be verified by the taxpayer, corrected where required and filed with the tax institution.
Sars says it wants to arrive at a return-free system for the majority of salaried individual taxpayers in which their tax liability is calculated using electronic data supplied directly to it by third parties and is reflected in a tax account sent to the taxpayer.
What do these changes mean for tax payers?
For employers: they have been given until the end of next month to start preparing for these changes.
Companies then have a 60 day window period – July 1 to August 29 this year – to submit employer PAYE deductions to Sars.
According to Sars, employees cannot receive or submit their tax returns until employers complete and submit their PAYE declarations to Sars.
Sars says it will provide all employers or companies with computer software that can reconcile the deductions they made from employees’ and what companies paid to Sars, free of charge.
Employers who do not comply by the August deadline will face strong penalties.
For Individuals the filing period for returns opens on September 1 this year. Individuals must request their returns from this date.
The deadline for the manual submission of returns is November 30 and for electronic submission January 23 next year.
Sars says certain individuals with incomes below R120000 a year, who have a single employer and source of income and who meet certain criteria, will not have to complete and submit a tax return.
Their details and income stream will be automatically captured by the new process.
Sars says it will not issue or mail any returns to taxpayers this year and will send letters to all registered taxpayers to explain why.
It says it is important that taxpayers notify it of changes to their addresses.