Every employer in South Africa must withhold PAYE (Pay-as-you-earn) from remuneration paid to an employee. The rate of withholding is determined by the South African Revenue Service and is published in their EMP10 Guidelines. Tax withheld must be paid on or before the 7th day after the month in which remuneration was paid.
It is the employer’s obligation to ensure the correct withholding of PAYE. Where an employer has not withheld the correct amount, it becomes a debt to the South African Revenue Service. When audited, employers often find their tax exposures to be very large and SARS is on a drive to audit all employers.
At the end of a tax year the employer must report the PAYE to SARS on an EMP501 form. This form shows what PAYE was withheld per employee. The income and benefits paid to an employee and the PAYE withheld is also shown on an IRP5 certificate that is handed to the employee. This document is filed by the employee with his or her personal income tax return.
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