TAX CERTIFICATES

Overview

When you receive your tax certificate from your employer for the current tax year that ends in February 2010, it will look a lot different to the certificates you have received in the past.

This because the form of tax certificate that SARS creates from the electronic tax certificate data supplied to it by employers only has space for 13 earnings items and 7 deduction items, and employers must keep within those limits. To make this possible SARS has “condensed” codes against which items are reported on tax certificates.

For example, previously there were 11 codes used for reporting fringe benefits, but from 2010 onwards there will only be 4 fringe benefit reporting codes.

You will also notice that the tax certificate number is very long (30 digits), made up of the employer’s tax reference number , the tax year and period of the tax year, some characters used by your employer to differentiate between different payrolls they might have, and finally a numeric value equivalent to the old type of tax certificate number.

The reason for this long and unique number is that employers will be able to submit amendments to previously issued tax certificates in subsequent tax years, when some omitted information comes to light. SARS must be able to identify which old tax certificate is being changed, so that they can correctly allocate the new information supplied and re-assess the employee. All this is now done by computer, without human intervention. You will no doubt have noticed that the use of computerised pre-populated tax returns has resulted in tax assessments being issued very shortly after your tax return has been submitted, and any refund due to you being paid almost immediately (unless the computer selects you for audit!).

If your employer pays your salary into your bank account, you will see that your bank account details are reflected on your tax certificate. This is because SARS will pay any refund due to you into this bank account.

However, if the bank account is not in your name (the name of the account holder is also disclosed on the tax certificate), they will probably make some checks to ensure that you will actually receive the refund, and not some unauthorised third party.

You will also notice that the total UIF paid by you and your employer (1% each), as well as the Skills Development Levy paid by your employer (1%) are now shown on your tax certificate.

This does not really affect you in any way, but enables SARS to ensure that the employer has paid all UIF and SDL contributions to them, in addition to the PAYE and SITE that has been deducted.

The days of employers deducting PAYE and UIF from employees but not paying the amount deducted to SARS are numbered!