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Thread: Mistake made on payslips, do I do the IRP5's correctly or according to payslips?

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    Mistake made on payslips, do I do the IRP5's correctly or according to payslips?

    Hi,

    I have a client that made mistakes on the payslips of the employees (ie. Included both "Company Car Fringe Benefit" and "Use of Motor Vehicle" benefit on the payslips, while only "Use of Motor Vehicle" should have been included.

    Do I now correct this on the IRP5's when doing the payslips (by not including both on the IRP5's) or do I do the IRP5's 100% according to the payslips? Or must they redo all the payslips correctly (and then put the actual PAYE paid on the payslips and then employees would have overpaid PAYE?) In the case of redoing the paylips, I am concerned that the payslips shouldn't just be redone, as these payslips were already given to the employees throughout the year and they might have used it for banks etc...

    Please advise.

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    Foremost is ensure that the IRP5's are correct - by that I mean that the correct benefit is reflected and that the actual PAYE that was deducted is reflected.

    There is no problem with re-issuing payslips to reflect fact. An alternative would be to just reverse the company car fringe benefit on the last payslip of the year, so that the it is nil for the tax year to date totals.

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    Dave A (30-May-13), J7J (03-Jun-13)

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    Hi Clive-Triangle,

    Thank you very much for this information. I confirmed this with SARS and they agreed that the IRP5's must state the correct information.

    So I wonder what happens in the case where you do an EMP501 for a client before or without reviewing their payslips and you issue the IRP5's incorrectly (but correctly according to their payslips...) What if you do the EMP501 for clients without going into the nitty gritty details of each employee's pay breakdown, benefits, etc?
    Last edited by J7J; 03-Jun-13 at 04:30 PM.

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    Yes, that is a task you can't hope to accomplish.

    If IRP5's contain incorrect data, it is ultimately up to the taxpayer to correct it on his tax return. In such a case, SARS send out a very specific letter of requirements. Those requirements include a statement from the employer confirming the error and an explanation is required.

    The first choice with IRP5's is that they reflect fact. If that is not attainable, they should reflect payslip information.

    It sounds corny, but when dealing with most things tax, the truth always sets you free , especially for a service provider such as yourself; make sure that you are not preparing them on your interpretation, but on fact or evidence.

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    So what about fringe benefits etc. that are not showing on payslips at all (if you know that an employee is driving a company car, his full cellphone account gets paid, etc)?

    Do you now add it to the IRP5's of these employees? Or do you simply advise management (in writing!) that all fringe benefits must appear on payslips and be taxed accordingly and ask that this process gets implemented ASAP?

    Please advise.
    Last edited by J7J; 04-Jun-13 at 08:36 PM.

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