IRP5 certificates and the EMP501: the employer reconciliation explained

What is the EMP501?

The EMP501 is the Employer Reconciliation Declaration. It checks three things against each other: the PAYE, UIF and SDL you declared on your monthly EMP201s, the payments you made to SARS, and the totals on every employee's tax certificate for the period. When all three agree, the reconciliation is accepted.

IRP5 or IT3(a)?

Every employee gets a tax certificate. An IRP5 is issued when employees' tax was deducted; an IT3(a) is issued when none was, for example when someone earned below the tax threshold. Both go into the EMP501.

Two reconciliations a year

Reconciliation	Covers	When
Interim	1 March to 31 August	Due by 31 October. Interim certificates are not given to employees.
Annual	The full tax year, 1 March to the end of February	Submitted from 1 April to 31 May. Final certificates go to employees.

Common source codes

Each amount on a certificate carries a four-digit SARS source code. Codes starting with 3 are income; codes starting with 4 are deductions and tax.

Code	What it is
3601	Salary or wages
3605	Annual payment, such as a bonus
3606	Commission
3701	Travel allowance
3713	Other taxable allowances
3810	Medical aid paid by the employer (a fringe benefit)
3696 / 3699	Totals: non-taxable income / gross taxable employment income
4001 / 4005	Pension fund / medical aid contributions
4102	PAYE deducted
4116	Medical scheme fees tax credit
4141 / 4142	UIF contributions (employee and employer) / the employer's SDL
4149	Total of PAYE, SDL and UIF

When employees get their certificates

Under paragraph 13 of the Fourth Schedule to the Income Tax Act, you give each employee their certificate:

• within 60 days after the tax year ends;
• within 14 days after they leave your employment; or
• within 14 days after you stop being an employer altogether.

Certificates may not be handed out before SARS has accepted your EMP501, except when the employee has died, retired or resigned.

How to submit it

1. Make sure every EMP201 in the period has been submitted and paid.
2. Produce the certificates from your payroll, and check that their totals match your EMP201s and payments.
3. Submit on SARS eFiling (up to 50 certificates) or e@syFile Employer (more than 50). Use the same channel for the interim and annual submissions.
4. Check the submission's status afterwards: an EMP501 isn't done until SARS accepts it.

Penalties

A late EMP501 costs 1% of the year's PAYE for each month it's late, up to 10% (paragraph 14(6) of the Fourth Schedule). SARS can also penalise employers who don't issue certificates on time.

Common mistakes

• EMP201 totals that don't match the certificates, often after a correction made in one place and not the other.
• Missing or wrong employee tax numbers, ID numbers or addresses.
• Directive numbers that don't match SARS's records, for example on a severance or lump-sum payment.
• Amounts under the wrong source code, such as an allowance reported as salary.

How NUMBAAS helps

NUMBAAS payroll gives every amount on every payslip its SARS source code as you run payroll. Its EMP501 working document totals each employee's certificate and sets them against the EMP201s, so differences show up before you submit, not after. You verify it and submit on eFiling or e@syFile, as usual.

For SARS's own guidance, see sars.gov.za.