PAYE, also known as Employees’ Tax, is a system where employers deduct tax from employees' remuneration (salaries, wages, bonuses, etc.) as it is earned and pay it to SARS on their behalf. This ensures income tax is collected throughout the year rather than in a lump sum.

All employers in South Africa must deduct PAYE from employees' remuneration if the employees are liable for income tax (i.e., their annual taxable income exceeds the tax threshold). This includes private companies, but public entities may have different obligations. Employers must register with SARS if they have employees subject to tax.

PAYE is calculated on taxable remuneration using progressive tax rates, rebates, and medical aid credits (if applicable). Employers use SARS tax tables to determine monthly deductions based on annualised income, subtracting rebates.

PAYE must be declared and paid monthly via the EMP201 return to SARS within seven days after the month's end (or the last business day before if on a weekend/holiday). Payments use a unique Payment Reference Number (PRN) via eFiling.

Employers must register within 21 business days of becoming an employer (unless no employees are liable for tax) using the required form via eFiling.

Late or non-submission of EMP201/EMP501 incurs administrative penalties and late payments have an automatic penalty of 10%. Interest is also levied on both the return amount and penalty amounts.

Employers submit EMP501 reconciliations twice yearly: interim (September - October for March - August) and annual (April - May for full year). Use eFiling (for <50 employees) or e@syFile Employer (for >50). Issue IRP5/IT3(a) certificates to employees. Unused Employment Tax Incentives may be forfeited if non-compliant.

You either started payroll in the middle of the tax year with the employee being employed prior with no take-on balances/payslips or the employee earns below the threshold.

If you already generated your EMP201 report and need to add more payslips for that period, the new payslips will simply be included in the next EMP201 report. Or you can delete the EMP201 report and regenerate it.

Tax and other statutory deductions are calculated on a daily basis and not monthly except for deductions with ceilings. If an employee works for a period shorter than a full financial year, the tax authority calculates the tax deduction based on the period worked based on days and not months. Other software tries to make the tax deduction as constant as possible from one month to the next. Although this is convenient, in many cases where an employee is terminated before the end of the financial year on the other software an adjustment is made to the tax deduction and if the employee was already paid their final salary, either the employer or employee is short-changed. We believe every cent counts and thus do not want such short-changed issues. You have the option to change this in the company profile.