COIDA Estimated Assessments: Where That Number Came From, and How to Fix It

A statement arrives from the Compensation Fund with an assessment on it, plus penalties, plus interest, for a year in which you never submitted anything. The instinct is to treat it as a mistake. It is not a mistake, and understanding where the number came from tells you exactly how to get rid of it.

Where the number comes from

Section 83(6) of COIDA deals with employers who have not furnished a return of earnings. Where that happens, the Director-General may assess the employer on the basis of estimated earnings, determined in accordance with section 82(5), and may impose a fine on top of that assessment.

So the figure is not a finding about your payroll. It is a substitute for information the Fund did not receive. Nobody looked at your business and concluded you paid that much — the Act simply permits an estimate to stand in the gap until a real return replaces it.

That distinction matters, because it points at the remedy. You do not argue an estimate down. You replace it with the truth.

There are two ways the Fund can substitute its own number

Section 82(5) is wider than most employers realise. It lets the Director-General estimate earnings in two situations: where an employer fails to furnish a return and where the estimate an employer has given is, in the Director-General’s opinion, too low.

So filing something is not the same as settling the matter. A return with earnings the Fund considers implausibly low for your industry, headcount or class can be replaced by the Fund’s own figure, and you are then in the same position as an employer who filed nothing.

This matters most to new businesses. Section 82(1A) requires an employer who begins business after the end of February to submit a return within seven days, showing estimated earnings for the period ahead — a guess, made early, that section 82(5) then allows the Fund to overrule. Estimate honestly rather than optimistically: an under-estimate does not save money, it invites a substituted figure you did not choose.

The 10% is a ceiling, not a rate

Almost every write-up on this subject states a flat 10% penalty. The Act says something more precise: a fine “not exceeding 10 per cent” of the assessment. It is an upper limit on a discretion, not a fixed levy.

In practice the Fund commonly applies the full 10%, so budget for it. But if the number on your statement is not exactly a tenth of the assessment, that is not necessarily an error — and it is worth knowing that the ceiling is what the legislation actually sets.

Two separate fines, and people conflate them

There are two distinct failures under COIDA, each with its own consequence, and reading a statement is much easier once you can tell them apart.

Not declaring. Section 83(6) — you did not furnish the return. The Fund estimates your earnings and may fine you up to 10% of the resulting assessment.

Not paying. Section 87 — an assessment was raised and you did not settle it as section 86 requires. The Director-General may impose a fine at the prescribed percentage on the outstanding amount, and refusing or failing to pay an assessment, instalment or fine is an offence under the Act.

An employer who has neither declared nor paid is exposed to both. This is how a modest assessment on a small payroll turns into a balance that looks impossible — it is rarely one big charge, it is several small mechanisms running for several years.

Interest, and why we are not going to quote you a percentage

Section 86 requires an assessment to be paid within 30 days of the date of the notice of assessment, or in instalments approved by the commissioner. Interest runs on an overdue assessment at a rate determined by the Director-General, subject to a statutory ceiling.

Because that rate is set administratively rather than written into the Act, any specific figure in an article ages badly — and you will find several different ones online, confidently stated. Read the rate off your own statement of account. That is the number being charged to you.

The order to fix it in

The sequence matters more than the effort. Doing these in the wrong order means negotiating over a figure that is about to change.

1. File the outstanding returns. This is the step that does the real work. Section 83(6) provides for the assessment to be adjusted where actual earnings turn out to be lower than the estimate — so a true return submitted for the estimated year is the mechanism the Act itself gives you. If you are unsure what has to go into it, our guide to what counts as earnings covers the definition and the ceiling.

2. Check the class the assessment was raised at. The estimate is multiplied by your assessment tariff, so a wrong industry class inflates everything downstream. The tariff tables show what each class costs.

3. Then take up penalties and interest. Once the assessment reflects real earnings, the penalties recalculate against a smaller base, and what remains is a much smaller conversation. If the Fund will not adjust, the formal route is a revision request — see disputing a COIDA assessment for the grounds and the 30-day window.

4. Ask about an arrangement before you ask for a letter. The Fund issues a Letter of Good Standing where the assessment is paid or under an arrangement — section 86 contemplates approved instalments. If a tender deadline is the reason you are reading this, an arrangement is often the faster path than clearing the whole balance.

If the estimate is for a year you had no employees

This is the most common version of the problem, and the most frustrating one: a company that stopped trading, or never employed anyone, being assessed year after year on earnings it never paid.

Filing a nil return addresses the year. It does not stop next year’s estimate, because the employer record is still open — that requires deregistration, which is a separate manual process on form CF-1C. Our deregistration guide sets out the document pack. Do both, or you will be back here in twelve months.

Note also that section 83(2) allows the Director-General to levy a minimum assessment. An employer with genuinely no earnings is therefore not always assessed at zero, which surprises people who expect a nil return to produce a nil balance.

When it is worth getting help

If it is one outstanding return on a live payroll, file it yourself — it is an afternoon in CompEasy and there is no reason to pay anyone.

It gets harder when several years are outstanding at once, when the Fund has opened a query on the account, or when the payroll records for the estimated years are incomplete. ClearComply does not act for the Compensation Fund and does not set these assessments. A registered labour practitioner handles the submission and the correspondence: an assessment revision is R1 100 where it is a single disputed assessment, and audit resolution is R7 200 where the Fund has an open audit or several years to reconstruct. Our audit guide explains which of those you are actually in.

Questions we get asked

Will the penalties be written off if I file everything? Not automatically. Filing changes the assessment the penalties are calculated on, which is usually the larger effect. Waiver of what remains is a discretion, not an entitlement.

The estimate is wildly higher than my actual payroll. Does that help me? Yes, and it is the strongest position to be in. An estimate that overstates real earnings is precisely what section 83(6)’s adjustment provision contemplates. Get the payroll evidence together before you make contact.

Can I just pay it to get my letter and sort it out later? You can, and when a tender closes on Friday people do. Understand that you are unlikely to recover an overpayment easily — the credit tends to sit on the account against future assessments rather than coming back to you.

ClearComply is a private commercial software provider and is not affiliated with, authorized by, or an official agency of CIPC or any government entity. We are not the Compensation Fund or the Department of Employment and Labour. Letters of Good Standing are issued by the Compensation Fund, not by us.