As a healthcare recruitment agency, your primary focus is placing skilled nurses and healthcare professionals in client facilities. While this requires careful management of staffing and operational compliance, one critical area that cannot be overlooked is tax compliance for agency employees. Ensuring that your staff’s tax status is accurate protects both your agency and your employees from unexpected liabilities or penalties from SARS.

Deducting and Paying Tax:
All healthcare recruitment agencies are legally required to deduct PAYE (Pay-As-You-Earn) and any other applicable statutory taxes from employees’ remuneration and pay these amounts over to SARS on time. This is a core responsibility of the agency and is non-negotiable under South African tax law.

The Role of the Employee:
While the agency handles the deductions, it relies on employees to provide accurate tax information. Employees must complete a Tax Declaration Form when joining the agency and update it whenever their circumstances change. This includes disclosing permanent employment or earnings from other agencies. Accurate disclosure ensures employees are taxed correctly according to their income bracket and prevents unexpected tax bills at the end of the year.

Why Tax Declarations Are Important:
A tax declaration form is not just paperwork—it is a critical compliance tool. Without it:

• Employees risk being taxed incorrectly.
• SARS may impose penalties or require additional payments.
• Agencies could face administrative challenges when reconciling tax deductions.

Non-Disclosure Risks:
If an employee fails to disclose other sources of income, the agency must default to standard SARS tax tables. Any under-deduction will be the employee’s responsibility. This can lead to additional tax payments, interest, or penalties at year-end. Completing the tax declaration form accurately and updating it regularly ensures both parties remain compliant.

Understanding the SARS AA88 Notice

SARS may issue an AA88 notice to appoint an employer as a third-party collector. This means that if an employee owes money to SARS, the employer is instructed to deduct the outstanding amount from the employee’s salary each month and pay it directly to SARS using the reference number provided.

There are two main types of AA88 notices:

1. Outstanding Assessed Tax
   This happens when an employee has worked for more than one employer, and not enough tax was deducted overall. SARS will first try to contact the employee to arrange payment. If that fails, the employer is required to start making deductions from the employee’s salary.
2. Outstanding Tax Returns
   If an employee hasn’t submitted their annual tax returns, SARS can issue a penalty ranging from R250 to R16 000 per form, per month until the returns are submitted. The employer must then deduct the penalty amount and pay it over to SARS.

Tip:
If you receive an AA88 for an employee, advise them to visit a SARS office as soon as possible. This often helps resolve the matter faster and prevents further penalties.

Conclusion:
Correct tax compliance is a shared responsibility. Agencies handle the deductions and payments, but employees must ensure their tax information is accurate and up to date. By prioritizing the declaration process, healthcare recruitment agencies safeguard their workforce and maintain full compliance with SARS regulations.

AHASA encourages all member agencies to review their employee onboarding processes and ensure the tax declaration form is properly completed and regularly updated. Accurate tax information is essential to protect your staff, your clients, and your agency.

This article was written by AHASA, an industry body for healthcare recruitment companies. For further assistance or information, contact us at info@ahasa.org or visit our website www.ahasa.org

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