People & Leadership

EMP501 submission: Deadlines, errors, and compliance tips     

When do you have to submit the EMP501 declaration—and what exactly is it? Find out in this straightforward guide to take charge of your payroll taxes.

Among the many end-of-year tasks every South African business has to undertake is reconciling payroll taxes and filing the associated EMP501 declaration.

Learn how to conduct this process by the book, from document preparation to the submission process.

Our guide will walk you through the essential steps to keep your employer tax obligations in line.

Here’s what we’ll cover:

What is EMP501?

The EMP501 is a reconciliation report that all employers must submit to the South African Revenue Service (SARS) twice a year.

It summarises your employees’ remuneration and the payroll taxes you have handled on their behalf.

The EMP501 ensures that the taxes you declared monthly through your EMP201 forms, such as Pay-As-You-Earn (PAYE), Unemployment Insurance Fund (UIF) contributions, and Skills Development Levy (SDL), align with the actual payments made to SARS.

It also reconciles this information with the individual tax certificates, known as IRP5 or IT3(a) certificates, issued to each of your employees at the end of the tax year. 

Preparing for EMP501 submission: Data and verification

Correct submission of the EMP501 is essential for your business’s tax compliance and helps your employees accurately file their personal income tax returns later in the year.

Conducting the submission process with adequate attention to detail means you have to gather key financial and personal information for all your employees, then thoroughly check their accuracy.

This helps you avoid unnecessary delays or penalties. 

What data do you need to reconcile?

Proper EMP501 reconciliation requires three basic sets of documents:

1. All the Monthly Employer Declarations (EMP201s) that you submitted throughout the tax year, which runs from 1 March to 28 February.
2. All the payments you made to SARS for PAYE, UIF, and SDL, excluding any penalties or interest.
3. The individual employee tax certificates, either IRP5s or IT3(a)s, which summarise each employee’s remuneration and deductions for the year.

Beyond these financial documents, accurate employee details are critical for a successful submission.

For every person on your payroll, ensure you have their:

• Full name and surname
• South African ID number or valid passport number
• Current postal residential address
• Start and end dates of employment within the tax year
• Comprehensive remuneration details, covering all income received
• Correct bank account details

Checking employee records and payroll data

Verifying your data thoroughly before submission can save you a lot of headaches.

Follow these steps to ensure accuracy:

1. Reconcile monthly declarations and payments. Cross-reference your payroll system’s year-to-date totals for PAYE, UIF, and SDL against the amounts you declared on your monthly EMP201 submissions. You should also verify these figures against the payments SARS has recorded. You can often pull a statement of account from the SARS eFiling system to compare these figures directly. Any differences here need immediate investigation and correction.
2. Review employee tax certificates. Carefully check each IRP5 or IT3(a) certificate. Ensure all mandatory fields are complete and accurate for every employee.
3. Verify personal details. Look out for common errors such as incorrect identity numbers, mismatched tax reference numbers, or outdated addresses. Confirm that the income tax reference number is correct for each employee.
4. Validate remuneration details. Double-check that the remuneration details on each certificate accurately reflect the remuneration paid to the employee for the tax year.
5. Utilise software validation. Many modern payroll software solutions offer built-in validation checks. Run these checks to automatically flag potential issues, helping you identify discrepancies before you submit the information to SARS.

EMP501 deadlines and submission process

The Employer Annual Declaration period typically opens on 1 April and closes on 31 May each year.

During this window, you must submit your annual reconciliation declarations (EMP501) to SARS.

This submission includes your accurate and current employee payroll information for the entire tax year, which runs from 1 March of the previous year to 28 February of the current year.

It’s vital to mark these dates on your calendar and begin your preparation well in advance. 

Submission channels

SARS offers two main electronic channels for submitting your EMP501 and related tax certificates:

• eFiling section of the SARS website
• e@syFile™ Employer software.

Both platforms allow you to upload your EMP501 and employee tax certificates, but your choice of platform depends primarily on the size of your business:

• If you have more than 50 employees, SARS requires you to use the e@syFile™ Employer software. This dedicated application is designed to handle larger volumes of data more efficiently and offers advanced features for managing reconciliation.
• For businesses with 50 employees or less, you can either upload directly into the SARS website, or via the e@syFile™ system.

Remember to use the same channel for all submissions related to a particular filing period to avoid confusion and potential issues.

What happens after submission?

Once you have successfully submitted your EMP501, SARS reviews the information you’ve provided.

SARS uses the data to pre-populate or auto-assess individual Income Tax Returns (ITR12) for your employees later in the year.

It is important to monitor the status of your submission closely on the platform you used.

If your EMP501 is rejected due to being incomplete or having data errors, SARS considers it as “not submitted.”

This means you could still face administrative penalties for non-compliance or late submission.

Therefore, verifying the success of each submission is your final, essential step in the reconciliation process.

Keeping detailed records for at least five years after submission is also a legal requirement and good practice for any potential SARS queries or audits. 

Addressing EMP501 discrepancies and amendments

As stressed earlier, careful verification during the preparation phase is key to a successful EMP501 submission.

However, despite your best efforts, errors and anomalies can sometimes slip through.

Common errors can range from minor typos to significant calculation mistakes.

For example:

• Incorrect employee details: like an outdated ID number or an incorrectly captured tax reference number. To fix this, update the employee’s profile in your payroll software, then generate a new, corrected IRP5 or IT3(a) certificate.

• Tax calculation differences: when the PAYE, UIF, or SDL amounts on your certificates don’t align with what was actually deducted or declared. If you identify an under-deduction, you must pay the shortfall to SARS and, where possible, recover the missing tax portion from the employee. If you over-deducted PAYE, it’s generally not corrected on the certificate.

• Missing mandatory fields: blank entries on IRP5/IT3(a) certificates, such as a physical residential address or employment dates, will lead to immediate rejection by SARS. Always complete all required fields accurately before attempting to submit.

Amendments

If you discover an error after submitting your EMP501, you will need to submit an amendment.

The process for submitting corrections is straightforward using either SARS eFiling or e@syFile™ Employer.

You simply access your submitted reconciliation on the platform, choose the edit function, and make the necessary changes to the affected employee certificates or the EMP501 itself. Then you can resubmit.

Again, always use the same channel you used for your initial submission.

SARS itself performs an Employment Tax Certificate Validation (ETV) process.

If discrepancies are found during this validation, SARS will issue a letter, often with a detailed file outlining the issues.

You must then rectify these identified issues and resubmit the corrected certificates. 

Ensuring EMP501 compliance: Best practices and post-submission

Consistent EMP501 compliance is the result of proactively managing your payroll and employee data throughout the entire tax year.

This constant attention to detail will save you time and stress during reconciliation periods.

Let’s list the most effective strategies:

Record-keeping

Ensure all employee personal details, remuneration changes, and deductions are accurately recorded in your payroll system as they occur.

This means regularly updating addresses, bank details, and employment statuses.

Remember, timely registration of new employees for income tax is also your responsibility as an employer, and this can be done through e@syFile™.

Regular reconciliation

Check payroll figures against your monthly EMP201 declarations throughout the year, not just at year-end. This helps you catch minor errors before they become major problems.

Software updates

Check that you’re using the latest version of SARS e@syFile™ Employer. SARS frequently releases updates to improve functionality and ensure compliance with the latest tax laws.

Modern payroll software automatically applies these updates and helps streamline the process.

Submitting an incomplete EMP501 or a late submission will result in administrative penalties.

Non-compliance penalties can amount to 1% of your year’s PAYE liability, increasing by 1% monthly, up to a maximum of 10% of the total PAYE for the year.

More importantly, beyond financial penalties, certain actions actually constitute criminal offences.

This includes wilfully or negligently failing to submit complete returns, failing to issue IRP5/IT3(a) certificates to employees on time, or failing to pay SARS your employees’ PAYE or UIF deductions.

These violations are subject to fines, or even imprisonment for up to two years.

Final thoughts

The EMP501 process is obligatory for South African business owners.

This annual reconciliation ensures your reported payroll taxes (PAYE, UIF, SDL) match payments and employee tax certificates.

Leveraging modern payroll and HR software simplifies the complex task of updating and matching this information, helping you avoid SARS penalties.

Payroll solutions minimise errors in this process by automating calculations, validating data, and cleanly generating certificates.