PAYE Registration

PAYE is the acronym for Pay As You Earn and is the tax paid by all employees over the PAYE threshold. It is deducted from the employees salary and paid over to SARS by the employer. It is paid over to SARS before the 7th of the month after it is collected. It is the single biggest contributor to the tax collector making up 38% of total contributions.

Why should I register for PAYE?
An employer must register within 21 days of becoming an employer. The employer is also required to register for UIF at the same time as PAYE.

PAYE and UIF contributions are paid to SARS by the employer after they have been deducted from the employees` salaries.

It is a criminal offence to withhold PAYE from SARS.

What documents and information do you need to register for PAYE?
SARS requires the company name, registration number, income tax number and business description for both PAYE and UIF registrations. A letter from your company bank confirming your banking details is also required.

You will need to estimate the total value of your payroll for the next 12 months as well as the estimated number of employees the payroll will be based on.

What is UIF?
UIF (Unemployment Insurance Fund) which is managed by the department of Labour. It is intended to give short-term relief to workers who become unemployed or who are unable to work because of maternity, child adoption or illness. It also provides relief to the defendants of a deceased contributor.

The contributions for this fund is collected by SARS but managed by the department of Labour.

Why do I need to register for UIF?
It is the employers responsibility to pay the UIF contributions over to SARS within 7 days after the end of the month. If the last day for payment falls on a public holiday or weekend, the payment must be made on the last business day before the public holiday or weekend or SARS will automatically add a 10% penalty.

What documents and information do you need to register for UIF?
SARS requires the company name, registration number, income tax number and business description for both PAYE and UIF registrations. A letter from your company bank confirming your banking details is also required.

How is UIF calculated?
The total UIF contribution to SARS is 2% of the employee’s salary. However, this amount is shared equally between the employer and employee who each pay 1%. This means that only a 1% deduction will be seen on the employee’s payslip. There is a salary ceiling of R14872 pm which means that the maximum UIF contribution per month per employee is capped at R148.72