Income Tax, PAYE, UIF, SDL and COIDA

Once you have a company registered at the CIPC, remember that you have to register your company with the various statutory bodies for income tax and withholding taxes such as PAYE, SDL and UIF.

1. Income tax: A tax that governments impose on financial income generated by all entities within their jurisdiction. By law, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. To register for Income tax you need to have your Identity document, Registration Certificate and Bank statement.
2. Pay as you earn (PAYE) tax refers to the tax required to be deducted by an employer from an employee’s remuneration paid. The employer is compelled to register in terms of paragraph 15 of the 4th Schedule to the Income Tax Act. The entrepreneur must submit the EMP 101e form which is available online or at the local SARS office. Registration is immediate and can be done online or at the branch.
3. Unemployment Insurance Fund (UIF): this is a compulsory contribution to fund employment benefits. The funds are utilised to offer short-term relief in the event that workers become unemployed or unable to work for various reasons. Any employer who is liable to register for the employees tax (PAYE) is compelled to register with SARS for the unemployment insurance contributions.According to the Unemployment Insurance Act and the Unemployment Insurance Contributions Act, all employees working more than 24 hours per month must be registered with the UIF. The employer is responsible for the registration of the employees.Employers must pay unemployment insurance contributions of 2% of the salary of each worker’s pay per month. The employer covers 1% and the employee another 1%. The employer is responsible for withholding the employee’s 1%. The payment is done through SARS but the employee claims are requests through the UIF. The employer must submit the forms UI-8 (company registration) and UI-19 (employees registration)
4. Skills Development Levy (SDL): this levy is used by the government to fund education and training as stated in the Skills Development Act, 1998. This levy is payable monthly by employers to SARS.
5. COIDA: All businesses must register with the Commissioner in deference to the Compensation for Occupational Injuries and Diseases Act.According to the Compensation for Occupational Injuries & Diseases Act 130/1993 amended in 1997, the employer is responsible for registering employees with the Compensation Fund.