PAYE & IRP501 Submissions

Are you looking for professional assistance in submitting a PAYE return and Bi-Annual IRP501 Recons correctly, without triggering a PAYE audit? Then you have come to the right place. Here at Hills Business Solutions, we take pride in offering premium commercial law advice and assistance services for any business.

What are PAYE and Bi-Annual IRP501 Recons?

You may have seen the word PAYE on your IRP5 pay slip or might of even heard it in passing from another staff member but have no idea of its meaning. Simply put, you are paying the tax you owe to SARS on a monthly basis instead of all at once at the end of the tax year, hence PAYE means ‘Pay As You Earn’. This is an ideal option as it saves the taxpayer from having to pay between 18% and 45% of their earnings (the taxable amount) to SARS in cash once a year as a lump sum!

Employers are required to withhold these taxes on a monthly basis, in order to pay them over to SARS on the taxpayer’s behalf. This is done by discussing with the SARS PAYE boards, which typically have different tax rates for employees who are paid either weekly, fortnightly or on a monthly basis. PAYE is calculated for the outcome of an individual’s income, this will include basic salaries, bonuses, fringe benefits and additional allowances.

PAYE is calculated monthly, then proceeds to be paid to SARS by your employer, this will occur regardless of if you get paid on a weekly or fortnightly basis. The employer should do your PAYE process by multiplying your earnings by 52 weeks, 26 weeks, or 12 months – all dependent on how you get paid. This will result in your annual amount being applied to the SARS tax board to further calculate your annual tax. Additionally, the result will be divided again by the same work period, in order to get the monthly PAYE tax which is then withheld, showcased on your IRP5 and paid over to SARS. Which all in all, gives the result of your PAYE contribution.

In situations where your employer pays for additional benefits, such as medical aid, pension fun and so forth, or even deducts these costs for you through using your income, your employer should then take the deductions or credits into account when calculating your PAYE and making the payment to SARS.

IRP501 Recon is a reconciliation done bi-annually in August and February reconciling the year’s annual salaries and the taxes paid to SARS. This is where it gets quite difficult, and if done incorrectly, could result in a PAYE audit.

How can we help you?

We have a highly experienced and skilled team that specialises in all tax types including PAYE. This forms part of the package Payroll. We use an online package to process our clients’ payroll. In doing this, we provide payslips and leave registers, as well as the PAYE due. We use this report, to fill out the PAYE returns, and inform our clients, of both the amount, as well as the reference number which is paid over to SARS. We do this early, to avoid penalties for a late submission.

This payroll programme also produces the Bi-Annual (either mid-year or year-end) IRP501 Recon. As it is produced by the same payroll programme that the PAYE is submitted, the Reconciliation is the same as the PAYE returns, therefore Hills Business Solutions ensures that the year-end Financial Statements, plus the PAYE returns, and the IRP501 recons all balance accurately. Structuring the employee’s and employer’s taxes to give both the employee and employer the best tax advantage in terms of allowable deductions. Therefore, when it is tax season, the IRP5 submission, along with the allowable deductions usually ends with a result of an Income Tax refund, if the taxes were structured well enough.

What is Our PAYE & IRP501 Recon Process?

The PAYE & IRP501 Recon process falls within our payroll services. That is why when doing your Payroll, the package we use produces the information required to be tax compliant, also allowing us to structure the taxes for both staff and Directors. Additionally, submit the required information on time, avoiding any audits on things like fringe benefits as we process your payroll the right way.

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