FAQ Blog Calculators Students Logbook Contact
Do your Tax with TaxTim and WIN R10,000  More info   T&C's apply


Retrenchment pay-out tax code

Posted 1 November 2012

During the 2012 tax year I received a retrenchment pay-out. It is reflected on my IRP5 with tax code 3907. According to the tax code definition I got off the SARS website 3907 is defined as: "Other lump sums (e.g. backdated salaries extended over previous tax years, not approved funds)."

Tax code 3901 is defined as: "Gratuities (retirement / retrenchment)."

Does it matter that the code seems to be incorrect on my IRP5, is there a tax implication?

TaxTim TaxTim says:
1 November 2012 at 13:24

It can make a difference as there are specific tax tables related to retrenchment payouts. On the bottom right had corner of your IRP5, is there a directive number? Also on the tax withheld section of the IPR5 is there an amount withheld for lump sums? It would be a good idea to consult with your employer about this in light of your research.

This entry was posted in Tax Q&A and tagged , , , . Bookmark the permalink.




Submit your tax return right here!

TaxTim will help you:

 Do Your Tax Return Easily
 Avoid penalties
 Maximise your refund
Tim uses your answers to complete your income tax return instantly and professionally, with everything filled in in the right place.

Let Tim submit your tax return direct to SARS in just a few clicks!

Get started

Blog Categories


Ask TaxTim

Got a question you want answered about tax?

Visit our helpdesk →

Get SARS Tax Deadlines in your Inbox
We'll tell you when you need to file, along with tax tips and updates.