From the 2020 year of assessment, SARS is performing payroll taxes calculation validations on the IRP5/IT3(a) certificates. Where it is found that the incorrect amount of taxes were withheld/contributed, a letter will be issued, accompanied by a file containing a list of the certificates that have failed the SARS calculation validation.

We have become aware that some employers have received correspondence from SARS regarding discrepancies on the employment tax certificates, related to the Skills Development Levies (SDL) contributions.

During the 2020/2021 tax year, one of the Covid-19 tax relief measure was a payment holiday on SDL from May to August 2020, where no contributions had to be paid to SARS (the SDL liability and contribution amounts were 0.00 for these months).

An important fact to remember is that the values of remuneration reported on the employee tax certificate contains the year-to-date totals for the tax year. The employee tax certificate however does not contain a breakdown of remuneration values per month.

The payroll taxes calculation validations applied by SARS is based on the year-to-date totals reported on the employee tax certificate, therefore SARS is not taking into account the 4-month SDL payment holiday from May to August 2020 when validating the SDL amounts. If the discrepancies for SDL are because of the SDL payment holiday, the validation must be ignored, and no corrections must be made.

How will I be able to verify if my SDL values were calculated correctly?

In order to verify the Skills development levy (SDL) calculations in the payroll system, you can print the 12 Month or History report to validate the values.

To provide you with assistance, the following articles are available on the Sage Knowledgebase:

• How do I calculate the Skills development levy (SDL) leviable amount?
• How do I print the 12 month history report from the History tab?
• How do I print the 12 month report from the Reports and Maintenance menu?
• How do I remove the SDL amounts for the Skills payment holiday which was applicable from May - August 2020?

Note: If changes were made on the employee’s History screen (HS), these changes will not reflect on the 12Month report from the Reports and Maintenance menu. The 12 Month History report under the History tab should be printed.

Possible reasons for discrepancies which must be corrected:

• If the update to Release 5.4c was not installed in May 2020, but installed in June or later, year to date corrections must be made to remove the SDL values for May (or any other month within the 4-month SDL payment holiday period to ensure the SDL values in the system for the months are 0.00).
• Period SDL Calculation ticked removed in the payroll system, resulting in SDL calculating for the full tax year (including the 4-month SDL payment holiday period).
• In the month of September 2020, the payroll administrator did not manually update SDL Percentage from 0% to 1% on the Basic Company Info screen.
• Incorrect manual adjustments made to the SDL value calculated by the system (other than changing SDL to 0.00 for the 4-month payment holiday period if necessary).

Note: If there are discrepancies and you require a detailed investigating and/or corrections, we suggest you contact your accredited Business Partner for further assistance.

FAQ

Q: What is the SDL Payment Holiday?

A: For the four-month period from May to August 2020, employers who were registered for SDL did not have to pay SDL to SARS (the SDL liability and contribution amounts were 0.00 for this 4-month period).

​Q: How do I qualify for the SDL Payment Holiday? ​

A: All employers who were registered for SDL automatically qualified for the SDL Payment Holiday.

Q: When is the SDL Payment Holiday effective?

A: Effective date: 1 May 2020 – 31 August 2020