This is a question I get from clients all the time, and honestly, it scares me every single time.
It worries me how many South Africans do not understand their responsibilities when it comes to SARS compliance. Very often, people only become aware of their non-compliance when they receive a final letter of demand from SARS—usually reflecting years of accumulated administrative penalties or unexpected tax due.
This has become even more common since employers are now required to register all employees for tax, and with the introduction of SARS auto-assessments. In the past, individuals could sometimes “get away with it” or fall under SARS’ radar. SARS has realised this was a major blind spot, and they are now turning up the heat.
The shock usually comes when the individual truly believed their employer had sorted everything out simply because PAYE was deducted from their salary. That’s when the lack of understanding between the roles of the employer and the taxpayer becomes painfully clear.
So where does the misunderstanding come from?
It usually starts with not understanding the difference between PAYE and income tax, and where the responsibility lies for each.
Let me briefly explain the difference. Please note: this is a very general overview. Every person’s tax situation is different, and you should always consult a registered tax practitioner for advice specific to your circumstances.
All employers who have one or more employees are required to register with SARS for PAYE. Employers are also now responsible for ensuring that their employees are registered for income tax and have a tax number (more on this in another blog).
Employers have a legal obligation to deduct PAYE from your salary and pay it over to SARS on a monthly basis. They calculate this using the official tax tables issued by SARS after the annual budget speech by the Minister of Finance.
The tax year runs from 1 March to 28/29 February.
The PAYE deducted from your salary is not the employer’s money. The employer acts as a middleman, collecting tax on behalf of SARS and paying it over monthly. Employers do not have a choice in this matter and will face penalties and interest if they fail to comply.
SARS implemented PAYE to help individuals stay up to date with their tax obligations by ensuring tax is paid throughout the year, rather than in one large amount at the end.
Once a year, employers must submit an EMP501 reconciliation, which allows SARS to confirm how much tax was deducted and paid over on your behalf. An IRP5 certificate is also issued to you, reflecting your income and the PAYE deducted. This certificate is essential when submitting your tax return.
By doing all of this, the employer has fulfilled their legal obligation:
* Declaring the income you earned from them
* Paying over the PAYE deducted from your salary
However—and this is the key point—you still need to submit your own tax return to SARS.
Your responsibility as a taxpayer starts the moment you begin earning an income.
You need to ensure that the correct tax is being deducted from your salary each month (if you earn above the tax threshold) by reviewing your payslip.
When tax season opens—usually around July—you must obtain your IRP5 certificate from your employer. If you earn other income, such as interest or dividends, you must also obtain tax certificates from the relevant financial institutions.
If you contribute to a medical aid or a retirement annuity, you will need those certificates as well.
Using your tax number (which appears on your IRP5), you must ensure your SARS profile is registered and active. Based on your personal situation, you will either need to submit a tax return yourself, or SARS may issue an auto-assessmentusing pre-populated information (more on this in another blog).
As a taxpayer, you are legally required to declare all income earned between 1 March and 28/29 February every year.
This allows SARS to reconcile the information received from your employer and other institutions with what you have declared—and determine whether you owe tax, are due a refund, or are fully compliant.
At Olora Accounting, we love serving our community by helping people understand the importance of tax compliance—and why it matters.
Our goal is to make the process as easy and stress-free as possible, because life is already complicated enough. No one wants to worry about unexpected tax bills or SARS knocking on their door.
If you need assistance with submitting your tax return or bringing long-outstanding returns up to date, contact us. At Olora Accounting, we love to serve—and we get it done.
What is a SARS Auto-Assessment?
Over the last couple of years, SARS has rolled out auto-assessments to reduce late submissions of tax returns and to make the tax return submission process easier for individual taxpayers in South Africa. This has largely been made possible by the requirement for employers to register all employees — whether casual or permanent, and whether earning above […]
Do I Need to Register for Tax in South Africa?
When you start your first job, there is so much new information coming at you that it can quickly feel overwhelming. One of the things that often causes confusion is whether you need to register for income tax. In the past, all employees had to register for income tax with SARS themselves in order to […]
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