On 23 April 2020, SARS released the original PAYE BRS (V19.3) which confirmed the IRP5 code to be used for TERS payments (i.e. IRP5 code 3724).

On 25 April 2020, SARS published FAQ’s for employers to explain the tax relief measures. This page has been updated several times, last time being on 25/05/2020.

According to the FAQ’s (number 28 & 29), code 3724 should be used to report ‘Covid-19 relief fund organisation’ payments (and not TERS payments). This payment is exempt from remuneration (i.e. not subject to PAYE, UIF, SDL etc.) but is subject to income tax on assessment.

SARS has since withdraw BRS V19.3 and we are still waiting for the new BRS to be published.

TERS Payments:

As mentioned in previous communications, TERS payments are exempt from taxable income in terms of section 10(1)(mB) of the Income Tax Act (i.e. not subject to PAYE, UIF, SDL etc.).

The PAGSA has received confirmation from SARS that no IRP5 code should be used for TERS payments. If you previously created the TERS line using IRP5 code 3602, you can simply edit the Earning line and remove it.

If TERS is paid to the employer to pay to their employees, the employer is simply acting as a paying agent.

The employer can still pay the TERS payment through the payroll for reporting, payslip and payment purposes, but no IRP5 code should be used.

Covid-19 relief fund organisation payments:

As mentioned above, this payment is exempt from remuneration (i.e. not subject to PAYE, UIF, SDL etc.) but is subject to income tax on assessment.

If the employee receives a payment from a ‘Covid-19 relief fund organisation’, the payment should be processed as an exempt earning using IRP5 code 3602. Once we get confirmation on what IRP5 code should be used (once the new PAYE BRS is published), it can be changed to the new code.