LATEST PUBLICATIONS (NOVEMBER2024)

Statutory organisations (e.g. SARS, Labour, WCF, etc) have published the following documents/notices during November 2024.

Link to documents: The link is either provided beneath the details of the document or in the description of the document.

PAGSA:
• 2024/11/08: PE 2024/10 – Publications October 2024
• 2024/11/07: NF 2024/34 – Comments Invited: Budget 2025
• 2024/11/13: NF 2024/35 – Status of Monthly Tax Certificate submissions
• 2024/11/25: NF 2024/36 – Tribute to Pat Kennedy

SARS:
• 2024/11/07: Memorandum on the Objects of the Tax Administration Laws Amendment Bill, 2024. The Memorandum on the Objects of the Tax Administration Laws Amendment Bill, 2024 has been extracted from the Tax Administration Laws Amendment Bill [B17—2024], as introduced by the Minister of Finance in the National Assembly on 30 October 2024
• 2024/11/08: Tax Administration Act: Rejection of application for a binding private ruling or a binding class ruling: Additional considerations (English / Afrikaans). G51526, GoN5533
• 2024/11/15: Binding Class Ruling 091 – Award of listed shares under a share incentive scheme
• 2024/11/22: Income Tax Act: Protocol Amending the Agreement between SA and Kuwait (English/Afrikaans). G51637, GoN5573
• 2024/11/22: Kuwait Protocol – date of entry into force is 2 October 2024
• 2024/11/22: Updated Tables of Interest Rates.
• 2024/11/22: The Tax Practitioner Connect Issue 58 is now available. In this edition, we talk about the release of new guides for Recognised Controlling Bodies (RCBs) and tax practitioners. This is an initiative that SARS has embarked on to update the Tax Practitioner Register and the biometric verification that SARS is introducing for eFiling. We also share information about third-party data submissions for Tax Exempt Institutions. Finally, the newsletter contains information about the new Donations Tax declaration form, new service channel offerings for Trust registration and a reminder for tax practitioners to ensure that they are using the tax practitioner’s profile on eFiling to submit returns and information on behalf of their clients.

LABOUR:
• 2024/11/12: Department of Employment and Labour Warns Public of Maternity Benefit Scam
• 2024/11/20: Labour Relations Act: National Bargaining Council for the Wood and Paper Sector: Dispute Resolution Levy and registration of Employers Collective Agreement: Comments invited [English/ isiZulu]]. G51629, GoN5563
• 2024/11/29: Labour Relations Act: National Bargaining Council for the Chemical Industry – Extension. G51663, GoN5593
• 2024/11/29: Labour Relations Act: Bargaining Council for the Civil Engineering Industry (BCCEI): Extension to non-parties of the Wage and Task Grade Collective Agreement. G51663, GoN5596
• 2024/11/29: Labour Relations Act: National Bargaining Council for the Fishing Industry: Extension to non-parties. G51663, GoN5594
• 2024/11/29: Labour Relations Act: National Bargaining Council for the Chemical Industry – Extension. G51663, GoN5593
• 2024/11/29: Labour Relations Act: National Bargaining Council for the Hairdressing Cosmetology Beauty and Skincare Industry: Extension to non-parties of Main Amending Collective Agreement. G51657, GeN2856

COID: Health & Safety
• 2024/11/20: Occupational Health and Safety Act: Regulations: Major Hazard Installations: Explanatory notes. G51628, GeN2841
• 2024/11/25: Compensation for Occupational Injuries and Diseases Act: Prescribed supporting documents to clear owners flagged for Compensation Fund audit. G51555, GoN5585
• 2024/11/29: Occupational Health and Safety Act: Regulations: Driven Machinery: Incorporation of National Code of Practice for Training Providers of Lifting Machine Operators. G51657, GoN5588

Employment Equity
• 2024/11/28: Employment Equity Amendment Act: Commencement (English / Afrikaans). G51684, P231

Other
• 2024/11/05: Invitation to submit technical Annexure C tax proposals for the 2025 Budget due 25 November 2024.

BUSA CALLS FOR THE UNEMPLOYMENT FUND TO BE PUT UNDER ADMINISTRATION

On 5 December 2024, Business Unity South Africa (BUSA) issued the following notice in the financial media, articulating the ongoing frustrations experienced by the public as well as organisations that interact with the Unemployment Insurance Fund, and calling for the Fund to be put under administration.
The notice follows.

BUSINESS CALLS FOR THE UIF TO RETURN TO ITS PRIMARY MANDATE AS CONTRIBUTORS STRUGGLE TO ACCESS UI BENEFITS.

Johannesburg, Thursday 05 December 2024 ― The operational inefficiencies and governance failures of the Unemployment Insurance Fund (UIF) are letting down hundreds of thousands of workers, many of whom are facing a bleak festive season without income. The UIF is failing in its primary function and should be placed under administration with immediate effect, overseen by a highly skilled and experienced individual akin to a bank curator.

BUSA has been calling for the UIF to return to its primary mandate, but little to no progress has been made for some time. The dysfunctionality of the UIF has emerged as a matter of extreme concern and urgency. Since our last public call to place the fund under administration, business and beneficiaries have yet to see significant progress in the administration of benefits related to their contributions.

Sanelisiwe Jantjies, BUSA’s acting director for social policy, commented: “According to StatsSA, half a million more people joined the ranks of the unemployed in the first six months of 2024. This does not account for the tens of thousands who, while still employed, have suffered significantly reduced work hours due to supply chain challenges and weakened economic conditions.

As we approach the festive season, these workers, along with their employers, have a valid expectation that in times of financial distress, they will be able to make a claim against this insurance. The recent addition of new types of leave for employees, to be paid by the UIF, further burdens a system that is already operationally weak. Unfortunately, the UIF’s inefficiencies have left these workers in a dire situation, unable to cushion the blow or address the historical backlog, despite multiple commitments to reform the fund.”

She added, “The current Reduced Work Time (RWT) benefits, a critical financial safety net for contributors facing reduced hours and associated loss of earnings, do not assist the majority of those affected. Workers could lose up to two-thirds of their usual earnings and still not receive any assistance. Many employers and employees are experiencing significant frustration and questioning the purpose of their contributions.”

The CCMA TERS programme was established to avoid mass retrenchments and is supposed to enable access to funds from the UIF and SETAs to support workers during business turnaround periods. This programme had the potential to avert job losses, yet the slow pace of processing means that most applicants are already retrenched, and businesses have closed before receiving any results. Given this reality, it is difficult to celebrate the recent announcement of an increase in the CCMA TERS budget to R400 million when it cannot be accessed due to the administrative issues within the UIF.

Jonathan Goldberg, the BUSA Labour Market Chamber Convenor at Nedlac, lamented that the inefficiencies within the UIF are well documented, with numerous stories from frustrated claimants who are often shuffled from pillar to post, waiting months and sometimes even years to receive their benefit payouts.

He noted, “This year, inefficiencies were compounded by a legal wrangle, resulting in the online systems uFiling and the UIF App being offline for several weeks, further frustrating applicants who were left in the dark about their claim status or forced to spend precious time and money standing in long queues at the labour centres.”

He added, “It is now almost exactly a year since the initial calls by organised business and organised labour for the UIF to be placed under administration. Despite time being afforded to the new Minister on the back of promises for major overhauls, nothing has changed. Workers and their employers remain frustrated by the inefficiencies and lack of support during times of need.

The mandate of the UIF is simple: it collects contributions from employers and workers, and during times of financial distress or lack of earnings (unemployment, maternity, illness, or reduced hours), eligible contributors can apply to receive financial assistance in the form of a small benefit.

Reports indicate that R26 billion has been allocated to labour activation programmes of dubious origin and impact, while the UIF continues to disappoint workers in need. The funds should go to employees during times of need, as they are the ones who contribute to these programmes. The lack of accountability and transparency in this process further underscores the necessity for improved governance with active oversight from organised business and organised labour (representing both funders and beneficiaries).

The current and proposed board structures as advisory are unacceptable, as risks highlighted and recommendations made by nominated representatives are simply not heeded. The strained economic conditions, coupled with the transitions that various industries are undergoing, demand a well-functioning, easily accessible insurance scheme for impacted workers. The UIF, in its current and proposed forms, is not that.

It is time for the UIF to finally be put under administration to ensure its rescue.

ENDS
Khulekani Mathe
CEO Designate

DATE OF THE 2025 BUDGET REVIEW

The Budget Review is normally presented on the last Wednesday of February every year.

However, in a year when the normal Budget Review date is close to 1st March, this leaves very little time in which payroll suppliers can implement those requirements of the budget that are legally effective from 1st March.

When this situation has arisen in the past, we have requested that an exception be made to present the Budget on the second last Wednesday of February, and our request has been acceded to (no doubt with the support of other parties).

The latest PARLIAMENTARY PROGRAMME FRAMEWORK FOR 2025 has been issued and confirms that the 2025 Budget Review will be presented by the Minister of Finance on Wednesday 19 February 2025.

Incidentally, the President’s State of the Nation Address will be presented on 6 February 2025.

SARS PAYE BRS: CHANGES TO THE ITREG REQUIREMENTS UNDER DISCUSSION

The ITREG process, as specified in the SARS PAYE BRS, describes how employers can submit a specially designed tax certificate at any stage of the tax year to register an employee (or any number of employees in a single submission) for income tax.

If the application is successful, SARS returns the income tax number(s) in a notice to the employer using the same channel that was initially used by the employer to submit the registration request (e@syFile or eFiling).

Recently, SARS briefed the PAGSA on difficulties that they have experienced with the ITREG income tax registration process and put forward a high-level proposal to correct the problems for discussion and for our suggestions.

These discussions will be continued in the new year.

At this early stage the proposed changes to the ITREG specification are not detailed, and a date has not yet been set for the roll-out of the changed requirements.

This Newsflash therefore serves as a ‘heads-up’ to make you aware that your payroll systems will have to be changed to accommodate the new requirements, and to allocate some time in your 2025 system development planning for this.

As soon as we have more details, you will be informed by Newsflash.

COMMENTS REQUESTED: PROPOSED INCREASE TO THE NATIONAL MINIMUM WAGE RATE PER HOUR

Government Gazette No. 51787
At this late stage of the year, the National Minimum Wage Commission’s report and recommendations on the annual review of the national minimum wage were published in Government Gazette No. 51787 on 20 December 2024 (dated 18 December 2024).
The purpose of this Newsflash is to bring this notice to your attention as soon as possible.
All interested parties including payroll suppliers and employers, are invited to submit written comments in respect of the recommendations to either [email protected] (by 10 January 2025) or to [email protected] (by 14 January 2025), and with the festive season ahead of us, there is not much time before these deadlines are upon us.

Proposed Calculation of the National Minimum Wage Rate
The NMW Commission considers several factors in its annual adjustment of the minimum wage.
These include inflation, the cost of living, and the need to maintain the value of the minimum wage; wage levels and outcomes of collective bargaining; gross domestic product (GDP); the ability of employers to sustain their businesses; the operation of small, medium, or micro-enterprises and new enterprises; and importantly, the impact on employment and job creation.
The notice proposes a calculation of the national minimum wage rate per hour that, after taking the comments into account and approval by the Government, will be published in February 2025 with effect from 1 March 2025.
Based on written submissions in August 2024 and on their investigation of employment and wage statistics, the National Minimum Wage Commission has recommended to the Government that the minimum wage for 2025 be increased by the consumer price index, plus 1,5%.

NMW Increase Rates
Note that the CPI rate of inflation that will be used for this calculation will be the December 2024 CPI inflation rate that will be published in January 2025. The CPI inflation rate was 2,9% in November 2024, a slight increase from 2,8% in October 2024.
This is perhaps an indication that the December CPI rate could be slightly higher than 2,9%, and if, for example, the December 2024 CPI rate turns out to be 3,0%, then the increase to the NMW rate will be 4,5%.
It is worth noting that the NMW rate per hour that came into effect on 1 March 2024 and that was based on a CPI inflation rate in January 2024 of approximately 5,1%, was R27,58 per hour, which was an increase of 8,5% from the 1 March 2023 NMW rate of R25,42 per hour.

Employment Tax Incentive Calculation
The brackets of the third step of the formula specified in section 7 of the Employment Tax Incentive Act to calculate the monthly ETI amount, start at R4,500 pm and end at R6,500 pm.
Based on an 8-hour working day and a 5-day week, R27,58 per hour equates to R4 780,53 per month.
This means that for an employee who is employed on an 8-hour per day, 5-days per week basis, and who earns no other remuneration besides a wage paid at the national minimum wage rate of R27,58 per hour, the first two steps of the ETI calculation formulae are redundant.
In addition, the upper limit of the formulae beyond which ETI is not calculated, is R6,500 per month.
This monthly rate equates to R37,50 per hour, a rate that could be reached before the current sunset date of the Employment Tax Incentive Act (28 February 2029) depending on the CPI rate over the years ahead and how far above it the NMW Commission decides to increase the NMW rate from year to year.
The PAGSA pointed out these aspects of the link between the NMW rate and the ETI calculation formulae in our proposal to change employment-tax related laws that we submitted in November 2024 to the National Treasury and SARS for their consideration for inclusion in the 2025 Budget Review.

LATEST PUBLICATIONS (DECEMBER2024)

Statutory organisations (e.g. SARS, Labour, WCF, etc) have published the following documents/notices during December 2024.
Link to documents: The link is either provided beneath the details of the document or in the description of the document.

PAGSA
• 2024/12/07 PE 2024/11 – Publications November 2024
• 2024/12/09 NF 2024/37 – UIF under Administration call
• 2025/12/10 NF 2024/38 – December PAGSA Limited services
• 2025/12/10 NF 2024/39 – Date of the 2025 Budget Review
• 2025/12/10 NF 2024/40 – ITREG Changes: Heads-up
• 2024/12/23 NF 2024/41 – Comments requested: Proposed New NMW Rates

SARS
• 2024/12/03 The e@syFile™ Employer version 8.0.0_256 specify the following changes:
o Adjustment to Notification Centre content to allow multiple instances of EMP501 letter; and
o Correction to pre-submission validation for 3622/3672, 3817/3867 to align with SARS PAYE BRS.
• 2024/12/10 The 2024 Tax Statistics bulletin and supporting documents are available on the SARS and National Treasury websites at www.sars.gov.za and www.treasury.gov.za. SARS and National Treasury welcome comments and suggestions from the public. Please send them by e-mail to [email protected]. See the Tax Statistics webpage for the detail.
• 2024/12/24 Tax Administration Laws Amendment Act 43 of 2024 (English / Afrikaans). G51827, GoN5737

National Minimum Wage (NMW)
• 2024/12/18 National Minimum Wage Act: Investigation into the National Minimum Wage: Comments invited before 14 January
• 2025. G51787, GoN5715
• 2024/12/18 National Minimum Wage (NMW) Commission Recommends CPI + 1.5% Adjustment for 2025 and invites further proposals

NATIONAL MINIMUM WAGE INCREASE

The Minister of Employment and Labour issued a notice on 4 February 2025 that specifies the National Minimum Wage rate per hour increases across the various categories of workers with effect from 1 March 2025.

An increase of 1,5% above the CPI inflation rate was recommended by the National Minimum Wage Commission towards the end of 2024 and this has been supported by Government. The final increase percentage was based on the rate of inflation six weeks prior to 1 March 2025 (i.e. the December CPI as published in January).

For General workers, the minimum wage rate has been increased by R1.21 per hour (4.4 %) from R27.58 to R28.79 effect from 1 March 2025.

The increases to the other categories of workers effect from 1 March 2025 are as follows:
1. Farmworkers: R28.79 per hour
2. Domestic workers: R28.79 per hour
3. Expanded Public Works Programme Workers: R15.83 per hour

Government Gazette No. 52053 issued by Minister Meth on 4 February 2025 contains additional wage rates that are too detailed to list in this Newsflash, summarised as follows:
1. The weekly wage rates of learners working under learnership agreements contemplated in section 17 of the Skills Development Act have been increased per NQF level by 4,4%.
2. Contract Cleaning Sector hourly rates
3. Wholesale and Retail hourly rates.

Note that it is illegal and an unfair labour practice for an employer to unilaterally change working hours or other employment conditions order to be able implement the NMW minimum hourly wage rates.

Employers with financial difficulties can request a concession for 12 months relief from the Department of Labour.

Lastly, employers are advised to take the Labour Appeals Court Judgement (refer to PAGSA Newsflash 2024-12) into account when calculating ‘wage’ for the purposes of compliance with the National Minimum Wage Act.

LATEST PUBLICATIONS (as at JANUARY 2025)

Statutory organisations (e.g. SARS, Labour, WCF, etc) have published the following documents/notices during January 2025.

Link to documents: The link is either provided beneath the details of the document or in the description of the document.

PAGSA:
2025/01/20: PE 2024/12 – Publications December 2024

SARS:
• 2025/01/03: National Legislation: The following Amendment Acts have been promulgated on 24 December 2024:
o Rates and Monetary Amounts Amendment Act 45 of 2024 (GG 51829)
o Revenue Laws Second Amendment Act 44 of 2024 (GG 51828)
o Tax Administration Laws Amendment Act 43 of 2024 (GG 51827)
o Taxation Laws Amendment Act 42 of 2024 (GG 51826)
• 2025/01/03 Global Minimum Tax Act 46 of 2024 (GG 51830) promulgated on 24 December 2024
• 2025/01/09 Global Minimum Tax Administration Act 47 of 2024 (GG 51884) promulgated on 9 January 2025
• 2025/01/15 The latest Monthly Tax Digest newsletter for January 2025 is now available
• 2025/01/31 Interest Rates Table 3 – Rates at which interest-free or low interest loans are subject to income tax
• 2025/01/31 Latest Tax Practitioner Connect newsletter: In the January 2025 issue we kick off with a gentle reminder to taxpayers to ensure that they only use registered tax practitioners. In this issue we also provide useful information about tax exempt institutions and an update on the latest scam about refunds on assessments. We explain the Medical Indemnity insurance and the tax implications of such and provide a brief overview of the latest enhancements to the SARS MobiApp. Please note that SARS is now issuing the Notice of Registration (IT150) through the SARS WhatsApp number and finally, should you have a Trust registered or planning to have a Trust registered, access the latest videos on Trusts to learn more
• 2025/01/31 Latest Government Connect newsletter: In the January 2025 issue we kick off with a gentle reminder to taxpayers to ensure that they only use registered tax practitioners. We also provide an update on the latest scam about refunds on assessments and highlight the Medical Indemnity insurance and the tax implications of such. We provide brief overview of the latest enhancements to the SARS MobiApp, and finally, please note that SARS is now issuing the Notice of Registration (IT150) through the SARS WhatsApp number.

COID: Health & Safety
• 2025/01/31 Occupational Diseases in Mines and Works Act: Declaration of Controlled Mines and Risk Work: Annexure B: Correction. G 52026, GoN 5822

EE: Employment Equity
• 2025/01/01 Start date for implementation of Employment Equity (EE) Amendment Act, No. 4 of 2022
• 2025/01/13 Crunch time as Employment Equity (EE) report submission deadline looms.

LABOUR
• 2025/01/16 Labour Relations Act: Change of name of Statutory Council: Statutory Council for Squid and Related Fisheries of South Africa to Statutory Council for Squid and Other Fisheries of South Africa. G 51915, GoN 5758
• 2025/01/17 Labour Relations Act: Motor Industry Bargaining Council: Extension to non-parties of Amending Administrative Collective Agreement. G 51917, GoN 5759
• 2025/01/17 Labour Relations Act: Bargaining Council for Motor Industry: Extension to non-parties of Amending Main Collective Agreement. G 51917, GoN 5760
• 2025/01/17 Labour Relations Act: Bargaining Council for Civil Engineering Industry: Renewal and extension of Construction Industry Retirement Benefit Fund Collective Agreement (English / isiZulu). G 51918, GoN 5761
• 2025/01/22 Labour Relations Act: Code of Good Practice on Dismissal: Correction: Comments invited by 25 March 2025. G51953, GoN 5780
• 2025/01/24 Labour Relations Act: National Bargaining Council of the Leather Industry of South Africa: Extension to nonparties of the tanning section collective amending agreement (English/ isiZulu). G 51948, GoN 5769
• 2025/01/24 Labour Relations Act: National Bargaining Council of the Leather Industry of South Africa: Extension to Non- Parties of the Footwear Sector Amending Collective Agreement (English/ isiZulu). G 51960, GoN 5782
• 2025/01/24 Labour Relations Act: National Bargaining Council of the Leather Industry of South Africa: Extension to nonparties of the general goods and handbag sector amending collective agreement. G 51948, GoN 5767
• 2025/01/24 Labour Relations Act: National Bargaining Council of the Leather Industry of South Africa: Extension to nonparties of the tanning section collective amending agreement (English/ isiZulu). G 51948, GoN 5769
• 2025/01/24 Labour Relations Act: Cancellation of Government Notice: Furniture Bargaining Council: The Main Collective Agreement; and Extension to non-parties of the Main Collective Agreement (English/ isiZulu). G 51948, GoN 5766

SOURCE CODE DESCRIPTIONS IRP5 code 7004 – Validation Rules

The Validation Rules for IRP5 code 7004 in the electronic file are:
• Mandatory:
• If Code 7005 is 0, then this field MUST be equal to zero (0.00)
• If YoA < 2021 and ETI qualifying 12-month cycle indicator (code 7005) is 1, then value cannot be greater than R1000 • If YoA < 2021 and ETI qualifying 12-month cycle indicator (code 7005) is 2, then value cannot be greater than R500 • If YoA = 2022 and ETI qualifying 12-month cycle indicator (code 7005) is equal to 1 and: o Month (code 7006) is equal to 03, 04, 05, 06, or 07, then value cannot be greater than R1000; or o Month (code 7006) is equal to 08, 09, 10 or 11, then value cannot be greater than R1750; or o Month (code 7006) is equal to 12, 01 or 02, then value cannot be greater than R1000 • If YoA = 2022 and ETI qualifying 12-month cycle indicator (code 7005) is equal to 2 and: o Month (code 7006) is equal to 03, 04, 05, 06, or 07, then value cannot be greater than R500; or o Month (code 7006) is equal to 08, 09, 10 or 11, then value cannot be greater than R1250; or o Month (code 7006) is equal to 12, 01 or 02, then value cannot be greater than R500 • If YoA = 2022 and ETI qualifying 12-month cycle indicator (code 7005) is equal to 3 then value cannot be greater than R750 • If YoA >= 2023 and ETI qualifying 12-month cycle indicator (code 7005) is equal to 1, then value cannot be greater than R1500
• If YoA >= 2023 and ETI qualifying 12-month cycle indicator (code 7005) is equal to 2, then value cannot be greater than R750
• If Monthly calculated ETI (code 7004) is greater than zero, then Remuneration Paid (code 7002) and Wage Paid (code 7008) and ETI Hours (code 7007) must be greater than zero
• Decimal digits are mandatory even if the decimal value is zero
• Must be decimal point (comma invalid)
• If YoA is less than 2019 and employee’s age for the specified month is less than 18 or greater than / equal to 30, then this field MUST be zero (0.00)
• If YoA is equal to 2019 AND Month (code 7006) is equal to 03 thru 07 (March thru July) AND employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
• If YoA is equal to 2019 AND Month is equal to 08 thru 02 (August 2018 thru February 2019) then,
o If employer SEZ code (code 2083) is valid as per Appendix E,
 If employee ETI SEZ code (code 3264) is valid as per Appendix E, then this field MAY be greater than zero (0.00)
 If employee ETI SEZ code (code 3264) is not valid as per Appendix E:
– If employee’s age for the specified month is greater than / equal to 18 but less than 30 then this field MAY be greater than zero (0.00)
– If employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
o If employer SEZ code (code 2083) is not valid as per Appendix E:
 If employee’s age for the specified month is greater than / equal to 18 but less than 30 then this field MAY be greater than zero (0.00)
 If employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
• If YoA is equal to 2020 then:
o ETI SEZ code (code 7009) is completed then this field MAY be greater than zero (0.00)
o If ETI SEZ code (code 7009) is not completed:
 If employee’s age for the specified month is greater than / equal to 18 but less than 30 then this field MAY be greater than zero (0.00)
 If employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
• If YoA is equal to 2021 then:
o If month is 04, 05, 06, or 07, then
 If ETI qualifying 12month cycle indicator (code 7005) is 3, then this field MUST be greater than zero
 Else, (code 7005 = 1 or 2)
– If ETI SEZ code (code 7009) is completed, then this field MAY be greater than zero (0.00)
– If ETI SEZ code (code 7009) is not completed:
 If employee’s age for the specified month is greater than / equal to 18 but less than 30 then this field MAY be greater than zero (0.00)
 If employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
o Else, (month <> 04, 05, 06, 07)
 If ETI SEZ code (code 7009) is completed, then this field MAY be greater than zero (0.00)
 If ETI SEZ code (code 7009) is not completed:
– If employee’s age for the specified month is greater than / equal to 18 but less than 30 then this field MAY be greater than zero (0.00)
– If employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
• If YoA is equal to 2022 then:
o If Month (code 7006) is equal to 08, 09, 10 or 11, then
 If ETI qualifying 12-month cycle indicator (code 7005) is equal to 1 or 2, then
– If ETI SEZ code ( code 7009) is completed, then this field MAY be greater than zero (0.00)
– If ETI SEZ code (code 7009) is not completed:
 If employee’s age for the specified month is greater than or equal to 18 but less than 30, then this field MAY be greater than zero (0.00)
 If employee’s age for the specified month is less than 18 or greater or equal to 30 then this field MUST be zero (0.00)
 If ETI qualifying 12-month cycle indicator (code 7005) is equal to 3, then:
– If ETI SEZ code (code 7009) is completed, then this field MUST be greater than zero
– If ETI SEZ code (code 7009) is not completed:
 If employee’s age for the specified month is greater/ equal to 18 but less than/ equal to 65, then this field MUST be greater than zero
 If employee’s age for the specified month is greater than 65, then this field MUST be zero (0.00)
o If Month (code 7006) is not equal to 08, 09, 10, or 11, then:
 If ETI SEZ code (code 7009) is completed, then this field MAY be greater than zero (0.00)
 If ETI SEZ code (code 7009) is not completed:
– If employee’s age for the specified month is greater than/ equal to 18 but less than 30 then this field MAY be greater than zero (0.00)
– If employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
• If YoA is greater than 2022 then:
o ETI SEZ code (code 7009) is completed then this field MAY be greater than zero (0.00)
o If ETI SEZ code (code 7009) is not completed:
 If employee’s age for the specified month is greater than / equal to 18 but less than 30 then this field MAY be greater than zero (0.00)
 If employee’s age for the specified month is less than 18 or greater than / equal to 30 then this field MUST be zero (0.00)
• Data for a full period of reconciliation must be submitted.
• Only applicable for month 01 and 02 of 2014 year of assessment and from 2015 year of assessment.
• If the certificate type is ITREG this field must not be completed.

All income and deduction components (e.g. salary, commission, allowances, benefits, medical contributions, employer information, etc.) must be reported against the applicable code as prescribed in the GUIDE FOR CODES APPLICABLE TO EMPLOYEES’ TAX CERTIFICATES PAYE-AE-06-G4.

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

Chapter 12. Archive: Long Service Awards
This chapter has been updated as a result of the interest shown and the many queries submitted on these changes since I first presented them in the Annual Payroll Tax Update Webinars in March 2022, and again in subsequent webinars in June 2022.

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 should be reported under IRP5 code (code) 3622 (3672 for foreign services income) from the 2023 tax year. Prior to the 2023 tax year a cash value was not allowed as a long service award for the R5000.00 non taxable reduction.

The value of the long service award included in IRP5 code (code) 3622 (3672 for foreign services income) must be added under IRP5 code (code )3696 only if the sum of 3622/3672 and 3835/3885 does not exceed R5000. If it exceeds R5000.00 the full value of he sum of 3622/3672 and 3835/3885 should be included under IRP5 code (code) 3699 on the employee tax certificate regardless if there is a non taxable value included.

A Long Service Award given to an employee that complies with the initial 15 years and any subsequent 10 years unbroken periods of service requirement should be reported under IRP5 code (code) 3835 (3885 for foreign services income) from the 2023 tax year.

The value of the long service award included in IRP5 code (code) 3835 (3885 for foreign services income) must be added under IRP5 code (code 3696) only if the sum of 3622/3672 and 3835/3885 does not exceed R5000. If it exceeds R5000.00 the full value of he sum of 3622/3672 and 3835/3885 should be included under IRP5 code (code) 3699 on the employee tax certificate regardless if there is a non taxable value included.

The changes to the Long Service Award requirements (discussed in sections below) looked rather innocuous, but they resulted in renewed focus by employers on their long service award policies and triggered many queries.
SARS have kindly assisted the PAGSA with the answers to some of these queries and have also provided a legal opinion on one aspect of the long service award provisions.
In addition the codes for long service award tax certificate reporting have now been finalised and are explained towards the end of this chapter.
Principles of the Long Service Award Requirements
Paragraphs 2(a) and 5 of the Seventh Schedule provide that a taxable fringe benefit arises when an employee acquires an asset from an employer either for no consideration or for a consideration that is less than the value of the asset.
The fringe benefit value is either the cost to the employer or the market value depending on the circumstances.
If an asset is granted to the employee as an award in recognition of long service, the fringe benefit value of the asset is the cost to the employer, and importantly, if the conditions for long service are met (discussed below), the taxable fringe benefit value can be reduced by the lower of the asset value and R5 000.
2021 Budget Proposal to Amend the Long Service Award Requirements
The 2021 Budget Review pointed out that over the years it had come to the attention of the legislators that some employers reward employees for long service in ways other than granting the acquisition of an asset.
A very welcome pragmatic approach was then taken.
Instead of SARS clamping down on these non-compliant employers, the budget proposed that the legislation should be amended to allow the taxable value of these other forms of awards to be made available as options for long service awards on condition that the long service conditions are met, and that the total value of all awards granted to an employee is reduced by up to R5 000.
These proposals were turned into draft amendments, issued for comment in July 2021, promulgated in the final Taxation Laws Amendment Act on 19 January 2022, and made effective from 1 March 2022.
12.1 Changes to the Long Service Award Legislation
Effective from 1 March 2022, the definition of ‘gross income’ and the Long Service Award (LSA) provisions in Seventh Schedule of the Income Tax Act were amended to extend the long service award options for employers.
The amendments have added three new types of awards for long service that can be paid or granted in addition to the long-standing ‘acquisition of an asset’ award.
The four types of awards for long service whose taxable value can be reduced by up to R5 000 from 1 March 2022 are summarised below, with a reference to the applicable legislation for each award.
The existing award type available:
1. Acquisition of an Asset [Seventh Schedule par 5(2)(b)]
The three new award types available from 1 March 2022:
2. Right of Use of an Asset [Seventh Schedule par 6(4)(d)]
3. Free or Cheap Services [Seventh Schedule par 10(2)(e)]
4. Cash [“Gross income” – Section 1 of the Act, par (c), proviso (vii)]
These changes are welcome and legitimise what some employers have been doing for years, but they do result in some interesting new developments.
The addition of points 2 and 3, being fringe benefits, is not a radical departure from the principle that we have been familiar with for many years, but allowing a cash payment as a long service award is a radical change.
Being potentially free of tax (up to the lower of the award value and R5 000), the long service award paid in cash breaks the old maxim that anything paid in cash to an employee in return for services rendered is always taxable.
But this departure from the rule is only if the long service conditions are met.
In case you want to read through the legislation itself, the amendments to the long service provisions are included in a later section titled “Extract of the Amendment Legislation” for your convenience.
12.2 The ‘Long Service’ Conditions
It is very important to understand the two long service conditions, at least one of which must be satisfied before the taxable value of the long service award that was paid or granted can be reduced by up to R5 000.
If one of the two conditions are not satisfied when an award is granted to an employee, the value of the award will be taxed in full and reported on the tax certificate as normal according to ‘what it is’ i.e. the type of award (see the ‘Tax Certificate Codes for Long Service Awards’ section beneath).
The ‘Long service’ conditions are:
1. An initial unbroken period of service of not less than 15 years, OR
2. Any subsequent unbroken period of service for the same employer of not less than 10 years.
Here are the actual words of the legislation in paragraph 5(4) of the Seventh Schedule:
Paragraph 5(4)
For the purposes of this paragraph, “long service” means an initial unbroken period of service of not less than 15 years or any subsequent unbroken period of service of not less than 10 years.
The conditions themselves are easy to understand but applying the law in the employment environment is often not as straightforward as what it seems.
12.3 Understanding the Long Service Conditions
‘Unbroken Period of Service’
If the periods of service of an employee are ‘broken’ then this would make it more difficult for the employee to meet the initial 15-year or the subsequent 10-year condition of an ‘unbroken period of service’ and any award would then not qualify for the ‘up to R5,000’ reduction.
What then is an “unbroken period of service” in practical terms?
SARS came to the assistance of the PAGSA with the following legal interpretation:
“The phrase “unbroken period of service” is not defined.
SARS interprets it to mean continuous employment with a single employer without a lawful termination of the employment contract by either party.
Having regard to the definitions of “employer” and “employee” in paragraph 1, transfers between employers who are “associated institutions”, as defined in paragraph 1 [of the Seventh Schedule], will not qualify as an unbroken period of service.
However, should an event take place when continuous service is deemed to occur under law, [for example, transfers under section 197 of the Labour Relations Act, 1995 ‘Going Concern’] this will constitute an unbroken period of service.”
 
The Seventh Schedule defines an “associated institution” as follows:
“associated institution”, in relation to any single employer, means—
(a) where the employer is a company, any other company which is associated with the employer company by reason of the fact that both companies are managed or controlled directly or indirectly by substantially the same persons; or
(b) where the employer is not a company, any company which is managed or controlled directly or indirectly by the employer or by any partnership of which the employer is a member; or
(c) any fund … [the wording of this clause deleted to reduce the complexity of the definition]
If an employee’s services are terminated (i.e. the contract of employment comes to an end), it is obvious that the period of service has ended, but what about ‘transfers’ of employees?
Applying the SARS interpretation, my opinion is that the period of service is broken if the transfer is between:
1. Two separate legal entities (this would imply termination of the employment contract)
2. Two companies (separate legal entities) even if they are controlled by the same company
3. Two companies that are ‘associated institutions’.
Alternatively, my opinion is that the period of service is unbroken if the transfer is between:
1. Two branches of a company that are not separate legal entities
2. Two separate legal entities as a result of LRA section 197 (‘going concern’) transfer of business.
The relevant subsections of LRA section 197 (Transfer of contract of employment):
(1) In this section and in section 197A—
(a)
(b) “transfer” means the transfer of a business by one employer (“the old employer”) to another employer (“the new employer”) as a going concern.
(2) If a transfer of a business takes place, unless otherwise agreed in terms of subsection (6)—
(a) the new employer is automatically substituted in the place of the old employer in respect of all contracts of employment in existence immediately before the date of transfer;
(b)
(c)
(d) the transfer does not interrupt an employee’s continuity of employment, and an employee’s contract of employment continues with the new employer as if with the old employer.
Variation to the Years of Service
The following aspects of long service awards are at the discretion of the employer’s long service award policy:
• The value of the award,
• Which award (or awards) are granted, and
• The number of years’ service that must be provided before qualifying for an award.
However, the tax rules are not influenced in any way by the employer’s policy.
The employer’s policy can prescribe longer periods of service than the legislated periods and still benefit from the ‘up to R5 000’ reduction but cannot prescribe shorter periods of service and still access the reduction benefit.
For example, employees who received their initial long service award in their 18th year of service will still benefit from the ‘up to R5 000’ reduction but must wait for a further minimum of 10 years (i.e. after at least 28 years of unbroken service), before a second award can be made that benefits from the reduction of ‘up to R5 000’.
Employers can grant or pay long service awards at any intervals that they choose, for example, after every 5 years of unbroken service.
There is no problem with this (in fact it can be a good thing), but any long service award paid or granted at service intervals that don’t meet the long service conditions, must be taxed in full.
To illustrate this scenario, assume that the employer’s policy is to pay a long service award in cash after every 5 years of service. The tax result is shown in the following table, including the tax certificate codes that are still to be discussed in a later section.
Table: Long Service Awards every 5 Years
Period of Service Cash Award Amount Is the Award Taxed? IRP5 Code
5 Years R3,000 Yes 3605
10 Years R4,000 Yes 3605
15 Years R5,000 Up to R5,000 tax free 3622
20 Years R6,000 Yes 3605
25 Years R7,000 Up to R5,000 tax free 3622
30 Years R8,000 Yes 3605
35 Years R9,000 Up to R5,000 tax free 3622
Code 3605 is used and not code 3601, because the award is by nature an ‘annual’ payment and must be treated as such by the payroll’s annualisation calculation. The only code that currently is an ‘annual’ code is code 3605.
Note that in the latest version of the SARS BRS, the following highlighted wording has been added to the description of code 3605:
“An amount paid or payable to an employee which is defined as an annual payment excluding any Long Service Cash Award required to be declared under code 3622/3672.”
The highlighted wording is correct for qualifying long service awards but is incorrect for awards made in recognition of long service but that don’t meet the long service conditions.
These amounts are not ‘long service awards’ in terms of the legislation requirements and must not be reported under a long service code that identifies them as such and that will result in SARS incorrectly applying the R5,000 reduction before calculating income tax.
Incidentally, the reporting of ‘annual’ amounts on tax certificates is under discussion with SARS for the future.
In what Month of the year are the Long Service Conditions Met?
It is clear that the reduction of the value of the long service award by the lesser of R5,000 or the value of the award can be applied during the tax year in which one of the two long service award conditions are met.
But the question is: In what month of the qualifying year can the reduction be applied in the payroll?
The answer from SARS Legal is logical and applies a ‘semi-accrual’ principle:
The reduction can be applied in the payroll in a month in the qualifying tax year from the anniversary month of the employee’s date of appointment onwards.
For example, if the anniversary month of the 15-year/10-year qualifying service period is:
1. March: Then the reduction can be applied in any month of that tax year from March until February
2. February: Then the reduction can only be applied in the February payroll, etc.
If the employee’s anniversary date is November, and the award was granted 5 months earlier in June, then this is does not meet the long service conditions and the reduction is not compliant.
Also, if the employee’s services come to an end between June and November, the reduction applied in June will have to be reversed.
This means that an employer’s long service policy that, for administrative convenience, seeks to grant the awards and apply the reduction to all qualifying employees in any fixed month of the year other than February, is incorrect.
Alternatively, if the employer wants to process all the long service awards in the same month, then this month must be February.
12.4 Application in the Payroll of the Long Service Awards
There are four types of awards that can be granted, three of which are fringe benefits, and one a cash payment:
1. Acquisition of an Asset [Seventh Schedule par 5(2)(b)]
2. Right of Use of an Asset [Seventh Schedule par 6(4)(d)]
3. Free or Cheap Services [Seventh Schedule par 10(2)(e)]
4. Cash [“Gross income” – Section 1 of the Act, par (c), proviso (vii)]
The employer can choose which award (or awards) to grant to the employee.
Multiple Long Service Awards
More than one type of award can be granted to a qualifying employee.
For an extreme example, the employer grants an R8,000 long service award in total, split up into R2,000 for each of the four types of awards.
• The tax calculation will reduce the R8,000 by R5,000 and R3,000 will be added to remuneration for the PAYE calculation.
• Tax certificate reporting is important and is explained in the next section, but in short, the R6,000 total of the three fringe benefit awards must be reported under code 3835, and the R2,000 cash award must be reported under code 3622.
Gift Vouchers (see SARS Interpretation Note 71)
Gift vouchers are a practical and popular method of recognising long service – the value of the award is clear, and it gives the employees the freedom to purchase the asset of their choice.
They are a form of property that represents a right to acquire goods or services from a merchant, and since 2013 they are regarded by SARS as an asset for the purposes of the long service award requirements. Accordingly, gift vouchers granted by employers to employees in recognition of long service qualify for the reduction to the fringe benefit value up to R5 000 provided that the long service conditions are met.
Gift vouchers must be reported on the tax certificate as an ‘acquisition of asset’ that would normally be reported under code 3801 but qualifying long service awards that are fringe benefits are now reported under code 3835 (see the ‘Long Service Tax Certificate Codes’ section below).
Krugerrands (see SARS Interpretation Note 71)
Krugerrands are considered to be goods or commodities rather than “money” because a Krugerrand does not have a face value (as does a R5 coin for example) and it is not used as “money” on a day-to-day basis to pay for goods and services.
This means that for the purposes of the long service award provisions, Krugerrands are regarded as “assets” and their value can be reduced by up to R5 000 provided that the long service conditions are met.
Krugerrands must be reported on the tax certificate as an ‘acquisition of asset’ that would normally be reported under code 3801 but qualifying long service awards that are fringe benefits are reported under code 3835 (see the ‘Long Service Tax Certificate Codes’ section below).
Tax Certificate Reporting Principles
It is important to note that once cash has been paid, or one of the allowable fringe benefits have been granted to an employee in recognition of long service, the nature of the transaction changes for the purposes of tax certificate reporting.
For example, if R10 000 is paid in cash as an award that is an annual payment by nature, cash would normally be reported under code 3605 but because the reason that it is paid is a qualifying long service award, R10 000 must be reported as a cash long service award (code 3622) on the tax certificate.
This is the same principle that is applied to overtime, commission, bonuses, etc. that are also cash payments. In other words, for tax certificate reporting, if there is an award for long service, the type of payment (cash) or the type of benefit granted changes its nature from ‘how is it paid or what fringe benefit is it’ to ‘why is it paid’.
It this is not clear, the codes that are explained in the next section should be of help.
12.5 Tax Certificate Codes for Long Service Awards
The latest PAYE BRS (SARS PAYE Business Requirements Specification) version 21.0.1 for the 2023 tax year includes the new codes and rules for long service award reporting on tax certificates that provide for the amended long service award requirements from 1 March 2022.
Long Service Award Codes
Note the following:
1. In all cases, the long service amounts reported under the codes indicated below must be the ‘gross’ amount before the ‘up to’ R5 000 reduction. SARS will apply the reduction in the assessment income tax calculation by reducing the total of code 3622 and code 3835 by the lesser of this total and R5 000.
2. Only qualifying long service award amounts that meet the long service conditions must be reported according to the long service codes discussed below. If the amount doesn’t qualify as a long service award, it must be reported against its normal tax certificate code.
Code 3601 – Income
Long service awards paid in cash are excluded from code 3601 and must be reported under code 3622.
Code 3622 – Long Service Cash Award
Long service awards paid in cash must be reported under code 3622.
Code 3801 – General Fringe Benefits
Long service awards granted as an ‘Acquisition of an Asset’ benefit or as a ‘Use of an Asset’ benefit must be reported under new code 3835. An ‘Acquisition of an asset’ or a ‘Right of use of an asset’ fringe benefit must only be reported under code 3801 if it is not a long service award.
It follows, for example, that it is possible for two benefits to be granted as an ‘Acquisition of an asset’, one in respect of a long service award (therefore reported under code 3835), and the other one is not a long service award (therefore reported under code 3801).
Code 3806 – Free or Cheap Services
Long service awards granted as a ‘Free/Cheap Services’ benefit must be reported under new code 3835.
Code 3835 – Long Service Fringe Benefit Awards
The total of the fringe benefit long service awards must be reported under code 3835.
12.6 Increase to the R5 000 Reduction?
In the light of the fact that it appears that the reduction value of R5 000 as provided for by paragraph 5(2)(b) of the Seventh Schedule has been in place since 2002 – just on 20 years – in our comments on the draft amendment in 2021, the PAGSA took the opportunity to request an inflation increase to the R5 000 reduction.
Correctly so, our request was not considered because the 2021 Budget did not propose an increase to the R5 000, and the legislators are not allowed to go outside of what was proposed in the budget.
However, I noticed in the 2022 Budget Review, hidden away, that there is a proposal to review the value of all thresholds in the coming year.
This might be as a result of our request but in any event, we hope to see some increases being included in the July 2022 draft Amendment Bills – if the state of the economy permits.
12.7 Extract of the Final Amendment Legislation
Paragraph 2(a)
2. For the purposes of this Schedule and of paragraph (i) of the definition of “gross income” in section 1 of this Act, a taxable benefit shall be deemed to have been granted by an employer to his employee in respect of the employee’s employment with the employer, if as a benefit or advantage of or by virtue of such employment or as a reward for services rendered or to be rendered by the employee to the employer—
(a) any asset consisting of any goods, commodity, financial instrument or property of any nature (other than money) has been acquired by the employee from the employer or any associated institution in relation to the employer or from any person by arrangement with the employer, either for no consideration or for a consideration given by the employee which is less than the value of such asset, as determined under paragraph 5(2): Provided that the provisions of this subparagraph shall not apply in respect of—
(i) any meal, refreshment, voucher, board, fuel, power or water with which the employee has been provided as contemplated in subparagraph (c) or (d);
(ii) any marketable security acquired by the exercise by the employee, as contemplated in section 8A, of any right to acquire any marketable security;
(iii) any qualifying equity share acquired by an employee as contemplated in section 8B; or
(iv) any equity instrument contemplated in section 8C; or
Paragraph 5(2)
(2) The value to be placed on such asset shall be the market value thereof at the time the asset is acquired by the employee: Provided that where the asset in question is movable property (other than marketable securities or an asset which the employer had the use of prior to acquiring ownership thereof) and was acquired by the employer in order to dispose of it to the employee or the asset in question (other than marketable securities) was held by the employer as trading stock, the value to be placed thereon shall be the cost thereof to the employer or, where such asset was held as trading stock and the market value thereof was less than such cost, such market value: Provided further that where—
Proviso (vii) to paragraph (c) of the definition of “gross income”:
The following paragraph is inserted at the end of the proviso to paragraph (c) of the definition of “gross income”:
(vii) the provisions of this paragraph shall not apply in respect of any amount received by or accrued to or for the benefit of any person in respect of long service as defined in paragraph 5(4) of the Seventh Schedule, to the extent that the aggregate value of an amount determined under this paragraph together with all amounts determined under paragraphs 5(2)(b), 6(4)(d) and 10(2)(e) of the Seventh Schedule do not exceed R5 000;”;
Paragraph 5(2)(b)
The following paragraph substitutes paragraph (b) of the further proviso to subparagraph (2) of paragraph 5 of the Seventh Schedule:
“(b) any asset is given by an employer to an employee for long service, such value to be placed thereon shall be reduced by the lesser of the cost to the employer of all such assets so given to the employee during the year of assessment and R5000: Provided that the aggregate value of an amount reduced under this paragraph together with all amounts determined under paragraphs 6(4)(d) and 10(2)(e) of this Schedule and paragraph (vii) of the proviso to paragraph (c) of the definition of ‘gross income’ in section 1 does not exceed R5 000.”.
Paragraph 5(4)
(4) For the purposes of this paragraph, “long service” means an initial unbroken period of service of not less than 15 years or any subsequent unbroken period of service of not less than 10 years.
Paragraph 6(4)(d)
The following paragraph is inserted after paragraph 6(4)(c) of the Seventh Schedule:
“(d) such use is granted by an employer to an employee for long service as defined in paragraph 5(4) to the extent that it does not exceed R5 000: Provided that the aggregate value of an amount determined under this paragraph together with amounts determined under paragraph (vii) of the proviso to paragraph (c) of the definition of ‘gross income’ in section 1 and paragraphs 5(2)(b) and 10(2)(e) of the Seventh Schedule does not exceed R5 000.”.
Paragraph 10(2)(e)
The following paragraph is inserted after paragraph 10(2)(d) of the Seventh Schedule:
“(e) any services granted by an employer to an employee for long service as defined in paragraph 5(4) to the extent that it does not exceed R5 000: Provided that the aggregate value of an amount determined under this paragraph together with all amounts determined under paragraph (vii) of the proviso to paragraph (c) of the definition of ‘gross income’ in section 1 and paragraphs 5(2)(b) and 6(4)(d) of the Seventh Schedule does not exceed R5 000.”.

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 should be reported under IRP5 code (code) 3622 (3672 for foreign services income) from the 2023 tax year. Prior to the 2023 tax year a cash value was not allowed as a long service award for the R5000.00 non taxable reduction.

The value of the long service award included in IRP5 code (code) 3622 (3672 for foreign services income) must be added under IRP5 code (code )3696 only if the sum of 3622/3672 and 3835/3885 does not exceed R5000. If it exceeds R5000.00 the full value of he sum of 3622/3672 and 3835/3885 should be included under IRP5 code (code) 3699 on the employee tax certificate regardless if there is a non taxable value included.

A Long Service Award given to an employee that complies with the initial 15 years and any subsequent 10 years unbroken periods of service requirement should be reported under IRP5 code (code) 3835 (3885 for foreign services income) from the 2023 tax year.

The value of the long service award included in IRP5 code (code) 3835 (3885 for foreign services income) must be added under IRP5 code (code 3696) only if the sum of 3622/3672 and 3835/3885 does not exceed R5000. If it exceeds R5000.00 the full value of he sum of 3622/3672 and 3835/3885 should be included under IRP5 code (code) 3699 on the employee tax certificate regardless if there is a non taxable value included.