Site (Standard Income Tax On Employees) {FPRN-25}

This program will only apply to South African clients as SITE is a concept that applies only to South African taxpayers.  The purpose of this program is: to validate that the deductions of personal tax for personnel members, as done by the salary calculation program (when salaries were calculated), are correct when compared to the current service record details of the personnel members; and to display the amounts that will be reported as SITE and PAYE. 

Pre-requisites to using this option:

• Salary Calculations for the period should already have been done.
• The correctness of PAYE and SITE calculations by the system depends on the correctness of Appointment and Resignation Dates, as entered in the Service Records {PBOP-2}.

General information

• This section of the manual is based on information contained in document IRP10, “PAYE and SITE, Volume 36, Book 1: Manual for Employers”, published by the South African Revenue Services (SARS), and on consultation with representatives of the SARS.
• SITE is not a separate tax to be paid, but a procedure under which the normal tax, in respect of a particular ceiling (R 60 000-00 for 2006) of an employee's so-called “nett remuneration”, is finally determined by the employer and deducted from PAYE. SITE and PAYE are then reported under separate tax codes on the IRP5 documents of the employees.
• Only that portion of “nett remuneration” during the “tax period”, which was earned at a rate not exceeding the ceiling, is subject to SITE.  
• The ceiling may vary from year to year.

• SITE is normally not refundable because it constitutes either the final or the minimum liability for normal tax.

• It is calculated only at the end of a “tax period” - not at the end of every pay period.  Hence, if a pay period does not contain the end of a “tax period”, PAYE is deducted normally.  Thus, for most employees, SITE will be calculated only once during a tax year.
• It applies only to employees who are in so-called “standard employment”.

• The following remuneration, which is likely to accrue to employees of tertiary institutions, is specifically excluded from “nett remuneration” it is, therefore, not  subject to SITE at all only to PAYE:
• Income that is taxed at average rates, e.g. lump sum benefits from pension funds.
• Any remuneration not derived from “standard employment”. 
• An example would be remuneration to an employee whose tax deduction is always advised, i.e. not according to the PAYE Tables. 
  This advice could be a fixed amount or a percentage of salary - but it is not calculation method “4”.  
• Any employee, whose entire compensation from the institution is paid by claim, will also fall in this category this is because such an employee is indicated as “Part Time” on the IRP5.
• Travel allowances.
• Any remuneration for an employee with “nett remuneration” below a tax threshold (i.e. a person who pays no tax at all).

1. Tax Period:
• A tax period is: any unbroken period in the year of assessment, during which an employer employed an employee in the RSA in “standard employment”.
• A tax period starts:
• On the first day of the tax year, if the employee was then in service;
• On the date of employment, if the employee joined later.
• A tax period ends;
• On the last day of the tax year, if the employee was then in service;
• On the date of termination of service, if this is earlier than the date above.

2. Nett Remuneration:
• This is the balance of taxable remuneration after the deduction of current and arrears contributions to approved pension and / or retirement annuity funds (up to the limits allowed by the Receiver).

3. Annual Equivalent Remuneration:
• When the tax period is a full year, this is the total nett remuneration received during the year.
• When the tax period is less than a full year, it is the nett remuneration pro-rated to a full year.
• This will give the amount of net remuneration, which the employee would have received, had he / she been employed for the full year at the rate of remuneration actually received during the tax period.
• Should the tax period not start and / or end at month beginning or end, the equivalent nett remuneration during the fractional portion of the month is calculated as the nett remuneration during the month prorated by the number of days that fell within the tax period. The PAYE deducted for the month is similarly prorated.
  

4. Annual (Non-Regular) Payment:
• This is essentially a one-time payment, i.e. an amount of nett remuneration which is payable once annually or is determined without reference to any period.  
• SARS is prescriptive about what constitutes an annual payment or not the user must set the “Regular E/D?” indicator for each earning and deduction accordingly in option "Earning / Deduction Types" {FPRG-6} (“Non-Regular” meaning “Annual”).
  
  
  Examples would be a service bonus or accumulated leave payment on resignation.  Note that occasional overtime is NOT recognised as an annual payment.
  

5. Annual Tax:
• The amount of normal taxes payable, on any nett remuneration, in accordance with the tables, less applicable rebates.
  

1. The Correctness of the “Regular?” Indicator for E / D Types.
• Check that the indicator for new E / D types created during the month, as set in Earning / Deduction Types {FPRG-6}, is correct then do Single Rollbacks {FPRN-23} and Single Salary Calculations {FPRN-3} as required.
  
2. Allocation of Transactions to Correct IRP5 Boxes.
• Check Global Earning / Deduction Detail {FPRG-7} and Individual Earnings / Deductions {FPRI-2} correct these, where required then do Single Rollbacks {FPRN-23} and Single Salary Calculations {FPRN-3}, as required.
  
3. Multiple Occurrences of Calculation Method 2 Bonus.
• Refer to the discussion on Calculation Method 2 - Annual Bonus in the on-line documentation of Calculation Methods {FPRG-25}.
• Check Individual Earnings / Deductions {FPRI-2} correct these, where required; then do Single Rollbacks {FPRN-23} and Single Salary Calculations {FPRN-3}, as required.
  
4. Handling of Pensioners
• As per the "Procedure for Handling Pensioners" in the Introduction to the Payroll System {HRM-2}.
  
5. Service Records {PBOP-2} for People with Unbroken Service, whose Contracts were Renewed during the Tax Year.
• The point to remember is that these people must received only one IRP5.
• They should be re-appointed without any service break.  
  
6. Advised Tax Transactions, other than SITE Advices.
• These are transactions for IRP5 Box 4103, where the Calculation Method was not 4 PAYE; such transactions will prevent a cumulative tax calculation at the end of any tax period.  The only valid advices of this nature would be advices in terms of the current tax regulations (e.g. a 25% deduction for pay-by-claims), or deductions in terms of Tax Directives.
• Check Global Earning / Deduction Detail {FPRG-7} and Individual Earnings / Deductions {FPRI-2}; correct these where required and then do Single Rollbacks {FPRN-23} and Single Salary Calculations {FPRN-3}, as required.
  
7. SITE Adjustments Coded to Box 4103.
• SITE adjustments may go only to tax boxes 4101 and 4102.
• Check Individual Earnings / Deductions {FPRI-2}; correct these where required, then do Single Rollbacks {FPRN-23} and Single Salary Calculations {FPRN-3}, as required.
  
8. Non-SITE Adjustments Coded to Boxes 4101 and / or 4102.
• Non-SITE adjustments may go only to box 4103.
• Check Individual Earnings / Deductions {FPRI-2}; correct these where required, then do Single Rollbacks {FPRN-23} and Single Salary Calculations {FPRN-3}, as required.
  
9. Late SITE Adjustments in February for Persons Subject to SITE Only and who Resigned Earlier in the Tax Year.
• If SITE adjustments are done for every pay_run, there should be no such cases, except for personnel members who resigned before new tax tables and regulations were implemented.
• In such cases, according to SARS, the employer may leave things as they are, provided tax was deducted according to the then-current tax regulations.
• If the SITE program indicates a late adjustment for a person who resigned after new tax tables and before the end of the tax year, but for whom tax was not deducted according to a valid regulation: a SITE adjustment should be advised for the person's last month of service and a Single Rollbacks {FPRN-23} and Single Salary Calculations {FPRN-3} should be done.
  The nett pay for these months, as well as the pay-over to the Receiver, should be reconciled outside the Payroll system.
• Such cases are identified by drawing SITE-only reports for every month since implementation of the new tax tables. 
  Year-ends must not be forced.  The record R - SITE Calculations and Print IRP5s in the Run Cycle Control file {FPRM-2} must be set to the required month cycle before this report is executed.
  

1. The first program will generate a "merge file"; from which the SITE report will be generated.
2. The second program will generate the actual SITE report.

Critically important information (delete if not applicable).

• Procedures:
• None