Do your Tax with TaxTim and WIN R10,000  More info   T&C's apply

When do I use code 3616 and 3601?

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?

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.

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.