Employers have an obligation to withhold employees’ tax and pay it over to SARS. They are also required to retain records of all the taxes withheld and issue IRP5 certificates.
Personal income tax is the largest contributor of revenue to SARS. It is therefore important to ensure that the institution complies with the tax legislation and that all payroll records are accurate and complete. Failure to do that may result in heavy penalties and interest.
Employers are easy targets for additional revenue collection since the administration relating to payroll is so onerous and mistakes due to human or programming errors may occur. It is also an easy way for SARS to access additional revenue from several taxpayers.
In addition, given the nature of the employee base at most institutions of higher learning, where there is a large component of contracted or non-fulltime employees.