EMPLOYERS & PAYE
As an employer, it is important to know how to properly handle PAYE deductions from employees' income and paying those deductions to the Department on behalf of those employees.
EMPLOYER RESPONSIBILITIES WITH PAYE
In cases where persons other than the owner (Employer) are employed in the business, the owner has the responsibility of administering the PAYE System of tax deduction in respect of the employees, and shall deduct PAYE from his or her 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 %). He or she 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.
ISSUANCE OF MONTHLY PAYE (P30) REMITTANCE FORMS
This remittance form represents the employer’s monthly payment of P.A.Y.E in respect of his or her employees for the tax period shown on the form, and is payable by the fifteenth (15th) of the following month.
Before submitting this form and its attachments to the Department it must be ensured that it is signed, dated and stamped by the employer or his or her representative.
ISSUANCE OF ANNUAL PAYE (TD5) CERTIFICATES
At the end of the year during which tax was deducted, but no later than the last day of January of the following year, the employer 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;
- Forward to the Inland Revenue Department one copy (triplicate) of the TD5 Certificate of each employee and an Annual PAYE Remittance Form showing the total emolument 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 Inland Revenue Department at the end of the year.
- Place within his records a copy of the TD5 Certificate (quadruplicate) of each employee and a copy of the Annual PAYE Remittance.
Employers must note the following:
- Total taxes shown on the TD5 Certificates as deductions from all employees must agree with the total PAYE remitted to the Inland Revenue for the income year.
- Total emoluments shown must agree with the records of the business and with the total of the TD5 Certificates attached to the Annual Remittance Form.
COMPLETION OF THE TD5 CERTIFICATE
All T.D. 5 Certificates must bear the employer’s legal name, address and Taxpayer Number. A rubber stamp may be used to affix this information. The certificate should also bear the Tax Account Number, full address and name of the employee, and the year to which the information pertains.
Where applicable, information requested on the TD5 Certificate with respect to the following must be supplied:
- Code Number used for tax deductions
- NIC (Social Security) Number
- Date employment commenced if later than 1st January of the income year
- Total Remuneration before deductions (not including all other taxable allowanced and benefits)
- Other taxable allowances and benefits
- Approved Pension Fund Plan
- National Insurance deducted
- Income Tax deducted
Deduction of tax made under any other order (e.g. contracts ) must not be included on the TD5 Certificate, but must be shown on a separate document.