Good day. Kindly advise on the following:
I have a client who is a director in his company, he does not have employees.
He draws a salary but he does not have a payroll system.
I have advised that we get his company a payroll system and enter all his salaries that he’s been receiving so that we can generate an IRP5 for his IT12 submission.
Kindly advise if there is a different way to resolve same issue or if my advice is correct.
Your client does not have to implement a payroll system in order for him to be tax compliant. Any person who derives income from a source other than a monthly salary from an employer, like your client who is a Director in his own company and draws money monthly from this company as his salary, must register as a provisional tax payer at SARS and then submit an IRP6 twice a year at the end of Aug and at the end of Feb, to declare this income to SARS and pay over the tax payable (using the normal SARS tax tables to calculate the liability). This process will then replace the traditional PAYE function of a company deducting tax off the employee’s salary and paying it over to SARS.
Then additional to these two IRP6 returns every year, your client will then also during the normal tax return submission period for employed individuals, submit his own ITR12, based on the two IRP6’s already submitted earlier the year.
Hope that helps!
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