SOURCE CODE DESCRIPTIONS IRP5 code 3907

Lump sum codes

In the electronic file IRP5 code 3907 is used for: Other lump sums (PAYE). Other lump sum payments.
Examples include:
· A Lump sum payment paid/payable by an employer due to normal termination of service (e.g. resignation or retirement), which is NOT a ‘severance benefit’, MUST be reflected under this code
· ‘Antedate salary/pension’ extending over previous years of assessment for years of assessment prior to 2025. From 2025 year of assessment, this must be reflected under source code 3623/3673 (updated in BRS v24 during July 2025)
· Lump sum payments from unapproved funds
· Gratuities paid due to normal termination of service (e.g. Resignation or a lump sum paid upon retirement where employee is below 55 years of age)
· Proceeds from an employer owned insurance policy (risk policy) where the employer premiums were NOT included as a taxable benefit in the employee’s income since the later of:
o The date on which employer become policy holder; or
o From 1 March 2012.
o (i.e. proceeds/benefits are not exempt i.r.o. section 10(1)(gG) of the Income Tax Act)
· Proceeds paid from an employer owned insurance policy (other than a risk policy) where the employer premiums were NOT included as a taxable benefit in the employee’s income since commencement date of policy (i.e. proceeds/benefits are not exempt i.r.o. section 10(1)(gG) of the Income Tax Act).
Code 3957 MUST only be used for foreign service income.

The prescribed Length of IRP5 code 3907 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