IFRS for SMEs / For bookkeepers / How to categorise payments to and from SARS
How to categorise payments to and from SARS
The rule
A payment to SARS settles something the company already owes: VAT collected from customers, PAYE deducted from employees, or income tax. It reduces a liability and is never an expense. A refund from SARS recovers an asset and is never income.
Which account
- VAT201 payments settle VAT payable; VAT refunds settle VAT receivable.
- EMP201 payments settle PAYE, UIF and SDL payable. The cost to the company was recognised with the salaries.
- Provisional and assessed tax payments settle income tax payable. The tax expense comes from the tax computation, not from the payments.
- A SARS line with no tax type needs checking against the SARS statement of account before it is posted.
Worked examples
| Bank statement line | In or out | Categorise to |
|---|---|---|
SARS VAT201 PAYMENT | Out | VAT payable |
SARS PAYE EMP201 | Out | PAYE and UIF payable |
SARS PROVISIONAL TAX | Out | Income tax payable |
Related
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