Change in maximum UIF ceiling

[knewman]

I have mistakenly used the wrong maximum UIF ceiling for all my EMP201 returns since July 2006.

I was using the value of R10,966 instead of R11,662.

I only realised this when finding out about the new increase that is effective 1 October which raises the level to R12,478.

My first question: what should I do about the fifteen incorrect EMP201 returns that I have submitted to SARS?

Would I have to go into SARS and redeclare them all with the correct values, or can I just work out the difference and add this to my next EMP201 return?

My second question: as this is my mistake can I deduct the employee's portion of the outstanding amount from their next salary (with their permission, of course), or should the company pay the full amount?

Thanks for any info, so glad to have found these forums!

Kevin

[Dave A]

I'll stick to the "right" thing to do i.r.o. the underpayments. I'd take it up with the UIF section of Department of Labour. SARS is really just a collection agent on their behalf. You'd be in for the shortfall and perhaps a penalty. Personally I'd request a pardon for the penalties - if you don't ask you don't get - and you might get lucky. It was an honest oversight and you're coming clean. Plus DoL's notification on this sort of stuff really sucks. When last did they notify their known clients of anything directly? They've got all our contact details...

If you get the employees' permission, I expect you can recover the employee's portion from them and that's probably the "cleanest" way. Otherwise you've either got to add it to their income which might affect their taxable income which might affect the PAYE calculations - or put it under payroll expenses which is where I post the company contribution portion, workmens compensation and that sort of stuff.

Any penalties imposed probably won't be a tax deductable expense

Quite a lot of fuss for not too much money in the grand scheme of things, huh?

Risk of exposure points are probably in the event of an audit and if someone over the threshold as applied makes an application for UIF benefits. The application for benefits risk will pass quite quickly. The way UIF payroll information is updated is an absolute mess i.m.h.o. However, the audit risk could remain for quite a while. At least five years I'd think.