Tax and Government Employees

We have highlighted some key areas which are relevant to government institutions.
Travel Allowance Codes
Travel Allowances are given to employees where employees need to travel for business purposes. Travel allowances can be a fixed amount or it can be used to reimburse expenses. There are three travel codes that can be used on your employee’s tax certificate (IRP5): 
  • Code 3701 – used when a fixed travel allowance is given
  • 3702 – this is a reimbursive allowance and is given when the employee travels in excess of 8000km a year and is reimbursed at the prescribed rates as set out in the tax legislation, or when the employee travels less than 8000km a year but is reimbursed at more than the prescribed rates. This reimbursive allowance may be given in addition to the fixed travel allowance. This is a taxable reimbursive allowance.
  • 3703 – This is a tax free allowance and is given where the employee travels less than 8000km for the annum, does not receive a fixed travel allowance and is reimbursed at the prescribed rates. This type of allowance may not be given with any other travel allowance.  
We have noticed that three travel codes above are appearing on some tax certificates (IRP5) which shows that these travel allowances are not being treated correctly by employers. The effect of this is that the employee faces a hardship when filing their tax return.
Employers need to make sure that allowances given to employees are being taxed correctly.
Find out more in our fringe benefits guide.
Government Employees and Filing of Returns
Top Tip: You need to submit your personal income tax returns on time, to find out more please visit our page on Tax Season 2017.

SARS has introduced administrative penalties when people fail to submit personal income tax returns. To see how penalties escalate click here.
In the instance of government employees who fail to submit their personal income tax returns, SARS appoints the employer as an agent to deduct the admin penalties due and follows one of two methods:
  1. For employers that use the PERSAL payroll system, SARS works with the National Treasury, via a Centralised PERSAL database, employers implement agent appointments and the penalties due are deduced from the salary of the employee and paid over to SARS
  2. For the remaining employers, SARS appoints them as agents and employers then deduct unpaid admin penalties from the salaries of the employees and pays these over to SARS.
Employees who are affected by these are encouraged to visit a SARS branch and file their outstanding returns. A separate request must then be made for the penalties to be waived.
Last Updated: 23/06/2017 1:33 PM     print this page
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