PAYE Reconciliation Changes (posted 30 June 2010)

For the current tax year there are some significant changes to the PAYE system at SARS.

Firstly, you can only claim a travel allowance for tax purposes if you keep a detailed logbook.

Secondly, the travel allowance is now taxed at 80% on a monthly basis (previously 60%.)

Thirdly, the medical deduction calculation for Payroll purposes has been amended.

Fourthly, you have to submit PAYE reconciliations to SARS twice a year (previously once a year after February year end.) This additional one will be after the end of August this year. This includes provisional IRP5's for all active employees and final IRP5's for all terminated employees.

Fifthly, ALL employees have to have bank account details and Tax Reference numbers on the 31 August submission.

SARS is becoming increasingly harsh in its approach to penalties for errors on the PAYE tax deducted monthly. It is highly recommended that you only use recognised Payroll Packages to calculate your deductions correctly each month, as it is virtually impossible to do this correctly manually anymore.

Additional information