It has become much simpler over the last few years for builders to comply with their tax obligations as a small business. Here’s how builders should register for PAYE, SDL and UIF contributions.
Builders’ Registration for PAYE
Builders are required by law to register with the South African Revenue Service (SARS) for their employees’ Pay-As-You-Earn (PAYE) tax, within 21 days of becoming an employer, unless the employees are not liable for normal tax.
Builders should apply to register as employers for PAYE on an EMP101e form.
Builders’ Registration for SDL
The following employers are exempt from paying a Skills Development Levy (SDL):
• Public service employers in the national or provincial sphere of Government (However, these employers must budget an amount equal to the SDL levies for training their employees).
• National or provincial public entities, if 80% or more of their expenditure is paid from funds voted for by Parliament (Again, these employers must budget an amount equal to the SDL levies for training their employees).
• Public Benefit Organisations exempt from paying Income Tax and to whom a letter of exemption has been issued by the SARS Tax Exemption Unit.
• Municipalities to whom a certificate of exemption has been issued by the Minister of Labour.
• Employers whose total remuneration subject to the SDL, payable to all employees over the next 12 month period, will not exceed R500 000.
Where an employer is liable to pay SDL, the employer must register with SARS, and indicate the jurisdiction of the Sector Education and Training Authority in South Africa within which the employer must be classified. While the first four employers above are exempt from paying SDL, they are not exempt from registration. Only the last employer mentioned is exempt from both.
Builders should apply to register as an employer for SDL on an EMP101e form too.
If a builder is required to register with SARS for PAYE and/or SDL, the builder is also required to register with SARS for the payment of UIF contributions.
Builders’ Registration for UIF
Builders who are required to pay the Unemployment Insurance Fund (UIF) contribution must register with SARS or the UIF office. Builders who are not required to register for PAYE at SARS, those who have not registered voluntarily as an employer for PAYE at SARS, and those who are not required to pay SDL, must register for UIF with the UI Commissioner.
Employers/employees are exempt from paying a UIF contribution in the following circumstances:
• When an employee is employed for less than 24 hours a month.
• When an employee received remuneration under contract of employment contemplated in Section 18(2) of the Skills Development Act.
• When employees in the national and provincial spheres of Government are officers or employees as defined in section 1(1) of the Public Service Act 1994.
• When an employee has entered the Republic to carry out a contract of service, apprenticeship or learnership within the Republic if, on termination thereof, the employer is required by law or by the contract of service, apprenticeship or learnership, or by any other agreement, to repatriate that person.
• If they are the President, Deputy President, a Minister, Deputy Minister, a member of the National Assembly, a permanent delegate to the National Council of Provinces, a Premier, a member of an Executive Council or a member of a provincial legislature.
• If they are a member of a municipal council, a traditional leader, a member of a provincial House of Traditional Leaders or a member of the Council of Traditional Leaders.
Builders should apply to register for UIF contribution on an EMP101e form.