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When do I use code 3616 and 3601?

Posted 10 August 2016 under Tax Q&A


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David says:
10 August 2016 at 7:23

We have a few sub-contracting individuals. Some of them provide ad hoc services to us when we call on them. They often work remotely or at a clients offices, they provide their own laptops, and they are specialists and generally get asked to fix a problem, and then they get on with it. Then there are others that are identical to the above, except they contract to us on a medium to long term, where their main income comes from us, as they work for us 5 days a week, for months or even years at a time. Neither of the above are Sole Proprietors and they do not invoice us. They are both paid via payroll. My questions is, can we pay both of the above under code 3616, or must we pay the latter example under code 3601? If we pay under 3616, do we need to get any sort of declaration from them to cover ourselves? If so, must it be in the form of an affidavit?

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TaxTim TaxTim says:
10 August 2016 at 8:15

You need to use the second option you mentioned above, the sub-contracting individuals you need to pay on source code 3616 and issue them a letter stating that they are regarded as freelancers and are allowed to work for other companies too (if you dont yet have a written agreement with them to this effect ).
The second group is regarded as employees and needs to be paid on source code 3601.


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