SARS Tax Codes

September 6, 2013 in Uncategorized

A tax code is a four digit identifier / number that SARS uses to identify information on an income tax return. It will usually appear alongside the amount it relates to, and is used by SARS to collate information about the tax paying community.
As an employer, you create tax certificates (IRP5s) for each employee, after submitting the tax returns for the company to SARS at the end of the tax year. An interim submission of tax certificate information is sent to SARS after August of each year, so that they are able to retain more current information.  Your employee uses the IRP5 certificate to validate how much income he/ she has earned, what type of income it is, and therefore also how much tax he owes SARS.

SARS has consolidated tax codes to simplify your financial and tax information into the following categories:
•    Income
•    Allowances
•    Fringe Benefits
•    Lump sums
•    Gross remuneration codes
•    Deductions
•    Employees Tax Deduction and Reason Codes

Additional codes are used to identify biographical information.  SARS revises the codes used regularly, and new codes are added to the list as required.
The general rules as prescribed and quoted by SARS regarding the use of tax codes are as follows:
•    All codes completed used for purposes of issuing an Employees’ Tax certificate must be in sequential order with the exception of the codes for gross totals.
•    The value of the specific remuneration amount paid to an employee must be reported on an Employees’ Tax certificate under the relevant code to which that specific type of remuneration relates
Ensure that your tax codes are correct and updated to avoid any penalties that may be applied by SARS due to incorrect information.

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