As the South African Tax Season arrives, there is always quite a buzz about the IRP5 certificate, as many people question what it is, what it does, and why they need it. Many have heard about the dangers of making wrong entries in the IRP5, and they are just afraid to get into trouble with the law. Some have heard that an IRP5 certificate is a Form, and others have heard that the IRP5 is a certificate, and so they wonder which is the truth.
In this post we want to clarify the issue of the IRP5 Certificate, as well as every other document related to it, and with which it could easily be confused. This will help you gain a better understanding of what the IRP5 certificate means for you personally, and also help you avoid the IRP5 pitfalls that could easily entrap you.
What is the IRP5 Certificate?
The IRP5 certificate is a document issued to the employee by the employer, and which shows the summary of all the remuneration (including allowances and benefits) that are paid to the particular individual by the employer during a tax year. This usually excludes any money paid outside the payroll, for example, the reimbursement of a pure non-travel business expenditure that is paid to the individual through the general ledger, usually after the expense has been made out of the individuals’ pocket.
Every employer is obliged by law to issue IRP5 certificates to all its employees after payroll reports have been submitted to SARS. The employer is expected to make this declaration through a document called the EMP501 declaration. The IRP5 certificate comes to you already filled with the necessary information; this is as it is provided by your employer. Employees will now use that information to fill the ITR12 on eFiling which is the SARS online tax filing portal.
It is very important to properly utilize the IRP5 Certificate because if you fail to do so, you can find yourself, or your employer liable to be prosecuted by the SARS.
How Do I get My IRP5 Certificate?
It is the duty of your employer to issue you with an IRP5 certificate. Of course, you have to wait until the end of the tax year to receive this document. If you have not received your IRP5 by the end of November you may approach your employer to request the IRP5 certificate. If it was an oversight you will likely be issued with the document immediately.
However, please be cautious if no IRP5 document is forthcoming because that could lead to a lot of trouble with the law. Furthermore, an employer who refuses to file taxes with the authorities is likely fraudulent and is not likely to hold up other obligations to employees such as UIF, Pension Fund contributions, Providence Fund contributions, and even Medical Insurance.
What Should I Do With the IRP5 Certificate?
Having received the IRP5 certificate from your employer the next thing you need to do is go online to the SARS efiling portal https://www.sarsefiling.co.za . After you log in with your details (username and password) and then you proceed to provide your tax information; that is your earnings and deductions for the year.
You are expected to provide the same information found on your IRP5 certificate onto the ITR12 on the efiling website. If you do this there should not be any problems, and you should be done with the documentation in less than 20 minutes.
However, when you make entries on certain source codes more sections will be opened for completion as well. Sometimes, it also becomes necessary to submit some documents for verification purposes. That is why it becomes necessary to be familiar with the contents of your IRP5 certificate before attempting to fill the ITR12. This will help you ensure that the IRP5 accurately indicates the monies you received from your employer and that the details are filled into the correct source codes.
Sometimes when you type into these source codes, other sections are opened for you to fill.
3651: This is for Income earned whilst working abroad
3810/4005: This is for Medical aid contributions
4006: This is for Retirement annuity contributions (on payroll)
3701: This is for Travel allowance
3702/3703: This is for Reimbursement for travel
3704/3715: This is for Subsistence allowance (local or foreign)
As mentioned above, sometimes it may be necessary to upload documentation supporting some source codes. These are some of the documents that may be requested for verification or audit purposes in order to complete your efiling session.
IRP5 / IT3(a)
Medical aid certificate
Investment income certificate / IT3(b)
Retirement annuity certificate
Other reports to confirm rental or trade income or expenses claimed. (receipts, vouchers, etc)
After submission of Documentation
Whether or not you are requested to submit additional documentation in order to complete the process of filing your tax information after you have submitted your ITR12 to SARS an IT34 assessment will be issued to you, which will then inform you about whether an additional amount of tax is payable to SARS or whether you should receive a tax refund from SARS.
For this reason it is important to ensure that your personal details registered with SARS are accurate and up to date. Sometimes SARS is unable to pay tax refunds even when they are due to taxpayers because they have provided wrong or misleading information to SARS. Sometimes this can even result in penalties.
If you are due for a tax refund but have not been paid within one week, please contact SARS on Contact Centre on 0800 007 277 to expedite a speedy resolution to any challenges.
The IRP5 certificate is similar to the IRP5 form in the sense that the form is filled by your employer and sent to SARS, while SARS returns the IRP5 Certificate to your employer who then returns it to you for the purpose of filing the ITR12 which is accessible on the SARS efilling website. As an employee, you have nothing to worry about as long as you are working with a reputable organization that is not involved in any form of criminal activity.