What to do if you have no IRP5/IT3a certificate?

By the end of May each year every employer is meant to have uploaded the IRP5/IT3a certificates of their employees to SARS via the EMP501 reconciliation process. For this reason a taxpayer’s IRP5/IT3a usually appears on their tax return already without them having to input it. Shortly after the reconciliation process at the end of May, the employer is meant to have issued the actual IRP5/IT3a certficates to all the employees.

However, sometimes an employee may not receive an IRP5/IT3a certificate from his/her employer. This could happen for any of the following reasons:

1. The employee works overseas for a foreign employer.

If the employee qualifies for the foreign employment income exemption and passes the 183 day / 60 continuous days test then the employee’s income should not be taxed in SA. However, such income should still be declared on the income tax return of the employee as a ‘Non-Taxable Amount’.
If the employee fails the 183 day / 60 continuous days test then the employee should declare the income on their tax return as a taxable amount under ‘Foreign Income’ (together with the related foreign tax withheld in the foreign country) and they will be taxed on it in SA. Any tax withheld in the foreign country will be off-set against tax to be paid in SA upon final assessment.

2. The employer is based locally but does not withhold tax from the employee.

If the employer is correctly registered for PAYE then it should withhold tax from its employees. However, if it fails to do so for any invalid reason then the employer may face punitive action from SARS. Under such circumstances, the employee should request their IRP5/IT3a certificate from their employer. If the employer is unable or refuses to provide the tax certificate then the employee should declare the income earned as ‘Taxable Income’ on their tax return. If SARS requests supporting documentation, the employee should submit an affidavit (can be sworn at a police station or to any approved Commissioner of Oaths) to SARS to indicate what the earnings of the employee were and why he/she is not in a position to submit their IRP5/IT3a certificate. In addition to the affidavit, the employee should also submit to SARS any other supporting documentation in support of their affidavit e.g. bank statements, payslips, employment contract, etc. In such circumstances, it is also advisable that the employee pays provisional tax twice a year to SARS in order to avoid any penalties from SARS for underpayment of tax.
There are circumstances in which an employer may legally not withhold tax from an employee and the employee will therefore not receive an IRP5/IT3a certificate e.g. if the employee is classified as an ‘Independent Contractor’. In such cases, the taxpayer should declare such income earned as ‘Taxable Earnings’ on their tax return and should pay provisional tax twice a year to SARS in order to avoid any penalties from SARS for underpayment of tax.

3. The employer has closed down.

If the employer has closed down then it is unlikely that the employee would have received their IRP5/IT3a certificate. If the employee is unable to obtain an IRP5/IT3a certificate they should declare the income earned as ‘Taxable Income’ on their tax return. If SARS requests supporting documentation, the employee should submit an affidavit (can be sworn at a police station or to any approved Commissioner of Oaths) to SARS to indicate what the earnings of the employee were and why he/she is not in a position to submit their IRP5/IT3a certificate. In addition to the affidavit, the employee should also submit to SARS any other supporting documentation in support of their affidavit e.g. bank statements, payslips, employment contract, etc. In such circumstances, it is also advisable that the employee pays provisional tax twice a year to SARS in order to avoid any penalties from SARS for underpayment of tax.