SOURCE CODE DESCRIPTIONS IRP5 code 4042

Deduction codes

In the electronic file IRP5 code 4042 is used for: Amounts deducted for the purposes of calculating PAYE in the current year of assessment in terms of s11(nA) and Fourth Schedule paragraph 2(4)(g) in respect of remuneration amounts paid to an employee in the current or a previous year of assessment that were refunded by the employee to the employer in the current year of assessment, i.e. recoupment of overpaid remuneration / clawback of commission received by the employee for his or her own benefit, excluding administration errors.

Code 4042 is Applicable from 2026 year of assessment.

Note:
• The original remuneration amount paid to the employee by the employer in either the current or an earlier tax year, for the benefit of the employee, which has accrued, must be declared under the relevant income code.
• This code can only be used for s11(nA) deduction and will be used in the ETV calc

The prescribed Length of IRP5 code 4042 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