SOURCE CODE DESCRIPTIONS IRP5 code 3901

Lump sum codes

In the electronic file IRP5 code 3901 is used for: Gratuities / Severance Benefits (PAYE). Gratuities paid/payable by an employer prior to 1 March 2011. Severance benefits, as defined, paid/payable by an employer after 1 March 2011, if employee:
o is 55 years or older
o became permanently incapable to be employed due to ill health, etc.; or
o services terminated due to reduction of personnel or employer ceased trading.
A Lump sum paid/payable in terms of par (d) of “gross income” which is not a ‘severance benefit’, MUST be reflected under code 3907. Code 3951 MUST only be used for foreign service income.

The prescribed Length of IRP5 code 3901 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