Third-party payments are the amounts a payroll run withholds from or raises against an employee and forwards on to someone other than the employee - SARS for PAYE and UIF, the Compensation Fund for SDL, and retirement and medical funds for their contributions.
What it means
The employer is only a conduit for these amounts; they belong to the third party from the moment they are withheld. That is why they are carried as liabilities, not as the employer's own income, until the payment actually goes out.
Where it fits in
Third-party payments are what clears the payroll liability account each cycle - the EMP201 payment to SARS and the various fund remittances are the concrete transactions that settle the liabilities a pay run raised.
Key rules
- Amounts withheld or raised for a third party, not the employer's own funds.
- Carried as liabilities from the moment they are withheld.
- Includes SARS payments (PAYE, UIF, SDL) and fund contributions.
- Clearing them is what settles the payroll liability account each cycle.
