SARS tightens payroll compliance scrutiny.
Under newly appointed Commissioner Dr Ngobani Johnstone Makhubu, employers should expect a more disciplined and data-driven approach — with less tolerance for payroll irregularities and grey areas.
South African employers are facing increased payroll compliance scrutiny as SARS strengthens its enforcement efforts. Many payroll practices that have historically received limited attention are now likely to attract closer scrutiny. Although these issues are not always the result of deliberate non-compliance, they expose employers to significant risk — what may appear to be a minor payroll oversight can become a substantial liability when applied across an entire workforce over several years.
SARS has continued to improve its data analytics capabilities. Increased use of third-party data matching, stronger integration between payroll submissions and employee tax returns, and more targeted employer audits are making it easier to identify discrepancies. Payroll irregularities that may previously have gone unnoticed are becoming easier to detect.
What may appear to be a minor payroll oversight can become a substantial liability when applied across an entire workforce over several years.
SARS compliance update, June 2026
Payroll practices under the microscope
- Fuel cards that are not taxed correctly
- Travel allowances provided without adequate substantiation
- Fringe benefits that are inconsistently applied
- Employer-paid funeral cover that is not taxed
- Incorrectly treated gap cover contributions
- Misclassification of late joiner penalties as medical aid contributions
- Remuneration structures designed to maximise net pay while creating payroll tax risks
Payroll non-compliance can have serious consequences beyond the underpayment of PAYE. Employers may face penalties and interest charges that can escalate quickly. In response, many organisations are conducting payroll reviews, reassessing fringe benefit policies, and investing in improved payroll systems — before SARS initiates an audit.
Conclusion
The appointment of the new SARS Commissioner signals a stronger focus on compliance and enforcement. Employers should treat payroll as a key compliance function and ensure their practices can withstand increased regulatory scrutiny. Act now — before SARS comes to you.
For informational purposes only · June 2026