Another tax year has come to an end and the 2017 tax filing season for all individuals opened on 1 July 2017. This is the time when each individual who has received income during the period of 1 March 2016 to 28 February 2017 will need to submit their Income Tax Returns to SARS, either via eFiling or by means of going in to a SARS branch.
In order for SARS to assess the total tax liability due from an individual, they need to be informed of the accumulated income which the individual has received during a particular period, as well as the amount of the allowable deductions for this same period. This will be either via remuneration as reflected on the IRP5 certificate or income received from another source which will be supported by additional source documents.
By law, the employer is obligated to submit the employee’s IRP5 to SARS which provides information about a particular tax year. This is indicated by the transaction year, assessment year and reconciliation period. Each certificate is allocated its own individual certificate number and displays all the company’s details for which the employee works such as company name, physical address and registration numbers for PAYE, Skills Development Levy and Unemployment Insurance Fund.
The employee’s personal details are also reflected showing their employee number, name, surname, date of birth, identity number, income tax reference number as well as physical and postal addresses. Where salary payments are made directly to a bank account, these banking details will reflect as well.
Your employer should issue you with a hard copy of your IRP5 certificate and it is important to check that the information is correct as should any of the information displayed on the IRP5 be incorrect, the employer will need to make a correction to the error and proceed with a re-submission to SARS in order to update the information. The individual is not allowed to make any changes to information reflected on the IRP5 certificate.
In certain circumstances, the employee may receive more than one IRP5. Each separate IRP5 will provide details concerning the dates that the employee has worked at the respective company as well as displaying the total income, allowances and fringe benefits received during that particular tax year. The IRP5 also reflects any statutory deductions made for Pay As You Earn, Unemployment Insurance Fund and Skills Development Levy. Contributions to Medical Aid, Provident or Pension Funds are also reflected.
Now on to the more important sections – understanding the more commonly used IRP5 source codes.
The IRP5 will list different categories of income that have been received during the particular period. The categories of income are grouped under different source codes. Some of the more common codes are listed below:
- 3601 - Income (Generally for basic salary amounts)
- 3605 - Annual Payments (Normally used for annual bonuses or once off payments)
- 3606 - Commission Payments
- 3701 - Travel Allowances (Subject to PAYE)
- 3702 – Reimbursive Travel Allowance (Assessed on assessment)
- 3703 – Reimbursive Travel Allowance (non-taxable)
- 3713 – Other Allowances – Taxable (cell phone, computer, tool, entertainment, other earnings subject to PAYE)
- 3810 – Fringe Benefit – Company contribution to medical aid (amount should agree to code 4474)
The total of the income received is shown as Gross Employment Income (Taxable) – Code 3699 and
Non-Taxable Income – Code 3696, should any non-taxable earnings have been received.
Employee salary deductions and any contributions made by the company will be displayed under this heading. Some examples of common codes are listed below:
- 4001 – Total pension fund contributions paid or deemed paid by employee (includes both employee and employer contribution)
- 4003 – Total provident fund contributions paid or deemed paid by employee (includes both employee and employer contribution)
- 4005 – Medical aid contributions paid and deemed to be paid by the employee (includes both employee and employer contribution) This also includes contributions towards a private medical aid.
- 4006 – Total retirement annuity fund contributions paid and deemed paid by employee
- 4472 – Employer’s pension fund contributions paid for the benefit of the employee
- 4473 – Employer’s provident fund contributions paid for the benefit of the employee
- 4474 – Employer’s medical scheme contributions paid for the benefit of the employee
- 4582 – Value of “remuneration” included in allowances and benefits (travel related)
- 4497 – Reflects the total deductions and contributions for the period
Tax Credits and/or Employer’s/Employee Contributions
- 4102 – PAYE (Indicates the amount of PAYE that was deducted from the employee and already paid during the period)
- 4116 – Medical scheme fees tax credit (indicates the total amount of the medical scheme fee tax credits already received during the period)
In summary, the IRP5 contains all the necessary information that SARS requires in order to calculate the tax liability on remuneration received for the tax year. The [email protected] employer 2017 IRP5/IT3(a) submissions have encountered some errors and some employers who submitted the IRP5’s on versions of [email protected] earlier than 6.7.5, will need to do a re-submission of the EMP501 and IRP5/IT3(a) prior to the employee being able to submit their tax return.
This only effects employees who have received income under the following source codes:
- 3701 – Travel Allowance
- 3702 – Reimbursive Travel Allowance
- 3802 – Use of motor vehicle (not operating lease)
- 3816 – Use of motor vehicle acquired by employers via operating lease
These employees should check with their employers if the IRP5’s were submitted on version 6.7.5 and if not, if a re-submission of the EMP501 and IRP5/IT3(a) submission has been done. After 24 hours from the time that the re-submission has been done, the employee can then request their ITR12 via eFiling, the Refresh IRP5/IT3(a) data option on eFiling should be used to ensure that the latest version of the IRP5/IT3(a) is pre-populated on the ITR12. If information code 4582 is present, submission can continue as normal.
The following deadlines apply to ITR12 submissions which must be made for the 2017 tax filing season:
- Manual (Post or at SARS Branch drop boxes) – 22 September 2017 (Non-provisional and Provisional)
- eFiling or electronic filing at SARS branches – 24 November 2017 (Non-provisional)
- eFiling submission – 31 January 2018 (This applies to Provisional taxpayers only)
Please make sure to submit your ITR12 before these deadline dates to ensure that SARS does not raise penalties or interest on any late submissions.
Should you have any further enquires or need any assistance in completing your submission, please feel free to contact our personal income tax department.
Michelle van Coppenhagen
Associate | Outsourced Accounting and Payroll, Johannesburg