PENSION AND OTHER FUND CONTRIBUTIONS …

1 Dear Employer PENSION AND OTHER fund CONTRIBUTIONS incorrectly captured BY employers Certain aspects of PENSION reform came into effect on 1 March 2016 and taxpayers including employers were informed of the required changes during November 2015. The impact was that the employer s contribution to the fund , which was previously non-taxable, became taxable from this date. Since the start of the Tax Season 2017 it came to our attention that some employers have incorrectly captured the fund CONTRIBUTIONS on the IRP5/IT3(a)s of employees. This includes PENSION , provident and retirement annuity fund CONTRIBUTIONS . The incorrect reflection of CONTRIBUTIONS against the fund specific codes resulted in employees potentially owing SARS money once they file their returns. To address this issue, employers should take the following codes into consideration when capturing PENSION fund CONTRIBUTIONS : 4472 Employer s contribution paid to a fund for the benefit of an employee 3817 Taxable Benefit in respect of employer s contribution paid to a fund for the benefit of an employee 4001 Code can include the following three scenarios: o Employee only CONTRIBUTIONS (if employee pays full contribution) o Employer only CONTRIBUTIONS (if the employer pays full contribution; employer s contribution deemed to be paid by the employee) o Employee and employer contribution (where the employee and employer contribute in part; employer s contribution deemed to be paid by the employee).

2 We request that employers that did not apply these codes correctly rectify the affected IRP5/IT3(a) certificates and re-submit it to SARS. Once the reconciliations have been re-submitted successfully to SARS the employees who have already filed their tax returns will have to contact SARS to determine the appropriate process to have their assessment rectified with the updated information. employers are urged to inform their employees of the current situation and request them not to file their tax returns until their respective employers inform them that the IRP5/IT3(a) certificates have been re-submitted and they are issued with a new IRP5/IT3(a). Those employees who file their returns via eFiling must remember to refresh their IRP5/IT3(a) certificate information before completing and filing their returns after the re-submission by the relevant employers .

3 The same principle as described above in respect of PENSION fund CONTRIBUTIONS will apply to provident fund CONTRIBUTIONS (codes 4473, 3825 and 4003) and retirement annuity fund CONTRIBUTIONS (codes 4475, 3828 and 4006). Sincerely THE SOUTH AFRICAN REVENUE SERVICE 5 July 2017 SARS_PAYE_BRS - PAYE Employer Reconciliation_V15 0 0