EMPLOYEES’ TAX – PAY-AS-YOU-EARN (PAYE)

What is it?

Employees’ tax, which comprises of Pay-As-You-Earn (PAYE) and Standard Income Tax on Employees (SITE), refers to the tax required to be deducted by an employer from an employee’s remuneration paid or payable. The SITE element is not applicable with effect from 1 March 2012. The process of deducting or withholding tax from remuneration as it is earned by an employee is commonly referred to as PAYE.
An employer who is registered or required to register with SARS for PAYE and/or Skills Development Levy (SDL) purposes, is also required to register with SARS for the payment of Unemployment Insurance Fund (UIF) contributions to SARS.

Who is it for?

The amounts deducted or withheld must be paid by the employer to SARS on a monthly basis, by completing the Monthly Employer Declaration (EMP201). The EMP201 is a payment declaration in which the employer declares the total payment together with the allocations for PAYE, SDL and/or UIF. A unique Payment reference number (PRN) will be pre-populated on the EMP201, and will be used to link the actual payment with the relevant EMP201 payment declaration.

How and when should it be paid?

PAYE must be paid within seven days after the end of the month during which the amount was deducted. If the last day for payment falls on a public holiday or weekend, the payment must be made on the last business day prior to the public holiday or weekend.
The following payment methods are available:
  • eFiling
  • Electronic payments through the internet (EFT)
  • At a branch of one of the relevant approved banking institutions (ABSA, FNB, Nedbank or Standard Bank). Cheque payments may not exceed R500 000. This limit applies irrespective of the number of tax periods being paid, or should multiple cheque payments be made.
  • At a specific SARS branch, cheque payments may not exceed R100 000. This limit applies irrespective of the number of tax periods being paid, or should multiple cheque payments be made.
Note:
Employers who pay, or are likely to pay Employees’ Tax exceeding R10 million in any
12-month period, must submit Employees’ Tax declarations and make payments electronically.

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