SOURCE CODE DESCRIPTIONS IRP5 code 3672

Normal Income Codes

in the electronic file IRP5 code 3672 is used for: Long Service Cash Award (Excl if IRP5 code 3672 + IRP5 Code 3885 <= R 5000, PAYE if IRP5 code 3672 + IRP5 Code 3885 > R 5000). A Long Service Cash Award given to an employee that complies with the initial 15 years and any subsequent 10 years unbroken period of service requirement – par (vii) of the proviso under par (c) of “gross income” in section 1 of the Income Tax Act.
Note:
· The full value (before excluding any amount) of a Long Service Cash Award that qualify for the R5000 exclusion, must be declared under this code (3622/3672).
· Long Service means an initial unbroken period of service of not less than 15 years and any subsequent unbroken period of service of not less than 10 years [par 5(4) of the Seventh Schedule to the Income Tax Act].
· A Long Service Cash Award, together with the value of the following taxable benefits given as a Long Service Award, will qualify for the reduction of not more than R5000:
o Acquisition of an Asset at less than actual value [par 5(2)(b) of the Seventh Schedule]
o Right of Use of an Asset (other than Residential accommodation and any motor vehicle) [par 6(4)(d) of the Seventh Schedule]
o Free or Cheap Services [par 10(2)(e) of the Seventh Schedule]
· Code 3672 MUST only be used for a Long Service Cash Award while on Foreign Service on date of accrual.
· Valid from 2023 Year of Assessment

The prescribed Length of IRP5 code 3672 in the electronic file is: N15

The abbreviations used within the description of the relevant codes mean:
• PAYE: Income is subject to the deduction of Employees’ Tax and will also be taxed when the income tax assessment for the employee is processed.
• IT: Income is not subject to the deduction of Employees’ Tax but will also be taxed when the income tax assessment for the employee is processed.
• Excl: Income is not subject to the deduction of Employees’ Tax and will also not be taxed when the Income Tax assessment for the employee is processed.
• Excl/PAYE: Depending on the circumstances described in the legislation, the income is either subject to both PAYE and Income Tax, or it is excluded from both PAYE and Income Tax