Reconciliation is the process of checking that two independent records of the same thing agree, and explaining any difference. Payroll reconciles the tax it declared against the tax shown on its employees' certificates.
What it means
Over a tax year an employer files twelve monthly EMP201 declarations and, at year-end, issues an IRP5 to each employee. Reconciliation confirms the total PAYE, UIF and SDL declared on the EMP201s equals the totals across all the IRP5 certificates. A mismatch points to an error in a declaration, a payment or a certificate that must be found and corrected.
Where it fits in
The EMP501 is the formal reconciliation, prepared twice a year - an interim one covering the first six months and an annual one covering the full year. It draws on the year-to-date totals payroll has accumulated and is usually built in e@syFile before submission to SARS.
Key rules
- Proves two records agree and accounts for any difference.
- The EMP501 reconciles EMP201 declarations to the IRP5 certificates.
- Done twice a year: interim (six months) and annual (full year).
- A mismatch must be traced to the declaration, payment or certificate at fault.
