Final Deduction System: Year-end Procedures
All employers are on Final Deduction System (FDS), which means that they calculate and remit the correct Pay As You Earn (PAYE) to ZIMRA. There are procedures that should be completed and returns submitted as detailed below:
End of Year Adjustment
Employers are expected to reconcile their payrolls and ensure that the correct tax is collected per employee by end of the year.
At the end of the year, the employer must make final adjustments to PAYE calculations, taking into account the total income, deductions and credits to which the employee is entitled.
In the case of shortfalls, the employer is obliged to make good the shortfalls and remit the tax and recover the shortfalls from employees on the final payroll. Where there are refunds, employers should also refund the employees on the final payroll for the year.
The employer should then extract the ITF 16 Return and submit to ZIMRA by 30th-January 2018.
Issue of Tax Certificates
All employees whose remuneration was subject to PAYE are entitled to be issued with tax certificates (Forms P6) for their records. The employer is required to issue forms P6 within 30 days from the end of the relevant year, or within 30 days of terminating employment services as the case may be. Forms P6 for the employees who are employed by the same employer for the full tax year should be marked
FDS on the face.
Submission of Returns (Forms ITF 1) This is for all those employees who:--
i. Terminate employment during the year of assessment;
ii. Change employment during the year;
iii. Work part time at the same time being fully employed by another employer;
iv. Start employment during the course of the year;
v. Receive pensions;
vi. Are executors/ executrix of deceased estates;
vii. Are in receipt of income which is not subject to PAYE
All employees who are required to submit a return will be notified by the Commissioner General by notice in the press. This notice is usually published in first quarter of each year.
Who should not submit returns of income?
All those employees whose income consists of employment income only and whose employer was directed to administer PAYE under the FDS system and did so during the year concerned, and the employee was in continuous employment with the same employer for the whole year.
The fourth instalment under Quarterly Payment Dates (QPDs) is due by 20th December 2017.
◆ Disclaimer This article was compiled by the Zimbabwe Revenue Authority for information purposes only. ZIMRA shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority.