An employer is any person, company or other entity that engages someone to render services in return for remuneration. In South African payroll terms it is the party that carries the legal duty to deduct tax from pay and account for it to SARS.
What it means
The moment a business pays remuneration above the tax threshold it becomes an employer for tax purposes and must register with SARS (the South African Revenue Service) for PAYE, and usually for UIF and SDL as well. Registration produces a PAYE reference number that identifies the employer on every declaration and payment.
Where it fits in
The employer sits at the centre of the payroll obligation: it calculates each employee's pay, withholds PAYE and the employee's UIF, adds its own UIF and SDL, declares the totals to SARS on the monthly EMP201, and pays the liability across. At year-end it reconciles those declarations on the EMP501 and issues each employee an IRP5.
Key rules
- Must register with SARS for PAYE before the first pay run that crosses the tax threshold.
- Liable to SARS for tax it should have withheld, even if it failed to deduct it from the employee.
- Also registers with the UIF and, where the payroll exceeds the SDL threshold, for SDL.
- Identified on all filings by its PAYE reference number.
