New SARS Code and System Item for Disaster Relief Funds

There are several organisations outside of government, such as the South African Future Trust (SAFT), providing COVID-19 relief funds for employers to keep paying their employees. The relief is usually offered in the form of a loan to employers and is paid directly to employees. To assist with the special tax treatment and reporting requirements for these payments (see below), SimplePay has created a new system item: COVID-19 Disaster Relief.

Tax Treatment

As outlined by the Disaster Tax Relief Bill, these payments are not included in remuneration for PAYE, SDL and UIF and therefore are not subject to tax. Although these payments are not included in remuneration for PAYE, SDL and UIF, they are included in remuneration for the purposes of calculating ETI.

Reporting on Tax Certificates

SARS has created a new tax code, 3724, for reporting these payments on IRP5s/IT3(a)s. This is outlined on the SARS website here.

Using the COVID-19 Disaster Relief System Item

To make use of the new system item created by SimplePay:

  1. Go to an employee’s profile
  2. Click on Add next to Payslip Inputs
  3. Under Other, select COVID-19 Disaster Relief
  4. Enter the Amount of the relief paid to the employee
  5. Click Save

You will notice that the payment is listed on the payslip as a Benefit and does not impact the Nett pay payable to employees. This is because the relief payments are made directly to employees by the organisation. The system item is simply used for satisfying the tax and reporting requirements and not to facilitate payments.

These details are also outlined in our help page here.

Should you need further assistance, please contact our support team.

Team SimplePay

Travel Allowance Updates Effective March 2018

As of the 2018/2019 tax year, the treatment of travel allowances where employees are reimbursed per kilometre travelled for business has changed. 

Previously, the travel allowance was not taxable on the payslip, irrespective of the amount per kilometre reimbursed. However, the travel allowance may have been taxed on assessment.

From 1 March 2018, if an employee is reimbursed at a rate above the prescribed rate, the portion above the prescribed rate is taxable on the payslip. The prescribed rate for the 2019 tax year is R3.61 per kilometre.

There are no changes to the way that you capture the reimbursement on a payslip on SimplePay. We aim to keep you compliant with SARS and therefore SimplePay has been updated to take these rules into account. The system will automatically split the travel allowance into the taxable and non-taxable portion, based on your inputs.

Please note that due to this change, the reporting codes for reimbursive travel allowances used on the IRP5 have also been updated by SARS.

For more information on this, refer to the following help page.