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Rumour that SARS will no longer allow additional IRP5s to be generated by employers

Thursday, 10 April 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

The answer to this query is based on legislation as at 2014/04/10.

Q: We have heard from a fellow accounting firm (hoping its a rumor) that in the near future SARS will put an end to us generating additional IRP5's / IT3's for the members of the Close Corporation , after the submission of the EMP501. This will end in us needing to complete the business's financials in just a month or two due to the reconciliations that needs to be submitted by the end of May each year.

A: We accept that the "additional IRP5” is required because the remuneration of the director (member of the CC), whilst it accrued before year end is only quantified (determined) after year end.  What we are basically saying is that this is not due to the member being entitled to variable remuneration (most likely a bonus). There is no indication that SARS will change this in the short term. 

Paragraph 11C of the Fourth Schedule that deals with the employees’ tax consequences where the remuneration of a director of a private company is determined after year end and there is also no indication that this will change.  We believe this to be significant as no changes were made to this paragraph when the concept of variable remuneration was introduced (from 1 March 2013). 



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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