New Feature: Long Service Awards
We are excited to announce that we have added another heavily requested feature to SimplePay; Long Service Awards (LSAs).
What is a Long Service Award?
LSAs are awarded to employees as a gesture of appreciation for services rendered in recognition of the employee’s length of service. These awards will only be recognised as such if they meet certain conditions set out by the Income Tax Act.
An LSA can take the form of cash, assets (e.g. Krugerrands or gift vouchers), reduced / free services, or the right to use an asset.
When using the LSA feature on SimplePay, the tax codes, as prescribed by SARS, are automatically allocated to the values, and are included in the IRP5 documents generated. SimplePay takes care of the special taxation requirements to ensure compliance when it comes to reporting LSAs.
How are Long Service Awards Taxed?
LSAs are taxed by SARS as a fringe benefit and should be reported under the correct SARS codes. The value of the fringe benefit is either the cost of the award to the employer or the market value of the award. The first R5000 of an LSA is not taxed.Thereafter, the balance is taxed. For example, if your LSA is valued at R7000, only R2000 will be taxed (R7000 - R5000 = R2000). Should your LSA be valued at R4000, you will not be taxed for the LSA.
The full value of the LSA needs to be reported to SARS under the following codes:
- 3622 / 3672 : Long Service Cash Award
- 3835 / 3885 : Long Service Award (non-cash)
For more information on the built-in LSA item and how to set it up on our system, please take a look at our help page here. Alternatively, we recommend getting in touch with our awesome Support Team at support@simplepay.co.za.
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Team SimplePay