RESPONSIBILITIES OF AN EMPLOYER
Where persons other than the owner are employed in the business, the owner (Employer) has the responsibility of administering the PAYE System of tax deduction in respect of the employees, and shall deduct PAYE from his employees.
The total amount deducted from the emoluments of employees must be remitted to the Inland Revenue Department by the fifteenth (15th) day of the following month in which the deductions were made.
An employer who remits the amount deducted from his employees after the statutory date will be liable to a penalty of ten percent (10%). The employer will also pay interest on the total of the amount deducted at a rate of 1.04% per month from the date on which it was due to the date of payment.
EMPLOYER DUTIES AND RESPONSIBILITIES REGARDING INCOME TAX
An employer has tax obligations throughout, as well as, at the end of the year in regards to taxation of his or her employees:
AT THE END OF THE YEAR
The following are obligations of the employer in regards to income tax on employees at the end of the income tax year:
- The company must issue the original and one copy of the TD5 Certificate to each employee showing total emoluments paid during the year and the total tax deducted
- The company must forward to the Inland Revenue Department one copy from the quadruplicate copies of the TD5 form of each employee and an Annual PAYE Remittance Form showing the total emoluments paid and the total tax deducted during the year (forms prescribed for this purpose will be posted to all employers whose businesses are registered with the Department).
- With the Inland Revenue Department, the company must place within its records a copy of the TD 5 Certificate (quadruplicate) of each Employee and a copy of the Annual PAYE Remittance.
THROUGHOUT THE YEAR
The employer must:
- Administer the PAYE System of tax deduction in respect of the employees
- Deduct PAYE from his employees
- Remit the total amount deducted to the Inland Revenue Department by the fifteenth (15th) day of the following month in which the deductions were made.
The employer must inform the Department if there has been:
- Change of Employment of an employee
- Death of the Employee
- Death of an Employer
Every employer is under obligation to deduct tax, where applicable under the following circumstances:
I. Change of Employment
If an employee changes his job, the deduction of tax by the former employer will cease. The employee will have tax deducted by the new employer on the basis of a new Tax Code Number.
II. Death of the Employee
If an employee dies and emoluments are due to him or her after his or her death, deductions are to continue as if he or she were alive.
III. Death of an Employer
If an employer dies, but his business continues, his personal representative must continue to make PAYE deductions.
IV. Change of Ownership
If a business changes hands, the new employer is responsible for the PAYE deductions.
V. Cessation of Business
If an employer ceases to carry on a business, he must, within one month after cessation, issue TD5 Certificates to the Department and to all employees from whose emoluments any tax was deducted.
Where a business ceases operations, PAYE deductions which had not yet been remitted to the Inland Revenue Department must be paid to the Department within fifteen days (15) after the date of cessation of the business.
IMPORTANT FORMS FOR EMPLOYERS
It is important that the following forms be filled-out accurately and delivered to the department during and at the end of the year:
- Annual Return Form – TD 6
- Return of Remuneration Paid – TD 5
- PAYE Monthly remittance Form – P30
- Particulars of employee leaving employment or deceased – TD4
Any employer who remits the amount deducted from his employees, after the statutory date will be liable to a penalty of ten percent (10%). He will also pay interest on the total of the amount deducted at a rate of 1.04% per month from the date on which it was due to the date of payment.
It is an OFFENCE under the Income Tax Act No. 1 of 1989 for an employer not to carry out his/her responsibilities as stated above.