What You Should Know About Payroll in South Africa to Avoid Penalties
July 23 2019
Employers in South Africa are responsible for paying all taxes upfront from an employee’s gross remuneration, and for recording how much payroll tax has been paid on the employee’s behalf. Failure to execute payroll tasks appropriately can result in penalties from SARS and the Department of Labour (DOL). Payroll duties vary by employer and employee depending on what was negotiated on in terms of benefits. By knowing some critical things about payroll, you reduce the likelihood of errors and penalties.
More information on Payroll penalties can be found here
Employers should be registered at both SARS and the Department of Labour
When starting a business, many entrepreneurs only register with SARS (for PAYE, UIF, and SDL) as an employer, but forget to register with the Department of Labour (for UIF).
SARS PAYE registration page here
Monthly PAYE payments are due before the 7th of every month
There are two important monthly deadlines for PAYE according to SARS. First, you need to submit your Monthly Employer Declaration (the EMP201 form). Second, you need to pay your PAYE before the 7th of the following month.
Tax collection and withholding
Any business that employs workers in South Africa has monthly withholding obligations for income tax and social security. Income tax is deducted from employees’ monthly/bi-weekly or weekly paychecks via the PAYE system at the rate that aligns with their income (ranges from 18 to 40 percent), and paid to the South Africa Revenue Service (SARS). Every time they are paid, employees must be issued a payslip containing details of their remuneration and any deductions made by their employer.
FAQ about payroll for employees
Can my boss deduct money from my salary or paycheck?
South African employers may not deduct money from their worker’s pay unless:
- The worker agrees in writing to the deduction
- The deduction is made in terms of a collective agreement, work loans taken by the employee, law (e.g. UIF contributions) or, court order
When can a deduction be made from my salary?
Deductions for damage or loss caused by the worker may only be made if:
- The employer has followed a fair procedure and given the worker a chance to show why the deduction should not be made
- The worker agrees in writing
- The total deduction is not more than 25% of the worker’s net pay.
What about deductions for Benefit Funds?
Employers must pay the employee’s deductions to benefit funds (pension, provident, retirement, medical aid, etc.)
You don’t have to do everything yourself
Keeping track of all your Payroll requirements can be complicated, stressful and time-consuming. Setbooks Accounting will keep track of all your required annual, bi-annual and monthly submissions to both SARS and the Department of Labour.
This article is for information purposes only and you are advised to seek professional advice from your own accountant as your individual situation will vary.