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Payslip Components

An employee’s payslip details their remuneration and deductions in order to determine their nett pay. This article briefly discusses each of the types of items that could appear on a payslip.


An employee’s remuneration is made up of any income and / or allowance, which is paid or is payable to them by their employer, as well as the value of any benefits. It is also known as gross income and is used to calculate an employee’s tax (PAYE) liability as well as any UIF and SDL contributions applicable.

Therefore, remuneration can be calculated as cash income + cash allowances + the value of benefits.

There are certain exclusions from remuneration, which are applicable to more complicated payrolls – these give rise to the following definitions:

  • Remuneration for PAYE purposes – total remuneration less any allowable taxable income deductions.
  • Remuneration for UIF purposes – total remuneration less any exclusions in terms of the UIF Act. The most notable of these exempt amounts is commission.
  • Remuneration for SDL purposes – this is generally the same figure as remuneration for PAYE purposes; however, certain exclusions may also apply.

Nett Pay

An employee’s nett pay is the cash amount that they will receive at the end of each pay period. It is calculated by subtracting any applicable deductions from the cash components (income and allowances) of their gross income.


Income items are for amounts owed to an employee as a result of their employment and in exchange for their service rendered. These will usually be amounts that the employee requires to live, such as their basic salary.

Income is generally reported under code 3601 and all custom income types will be reported as such. Where an employee’s income should be reported under a different code based on their classification, i.e. directors and independent contractors, this will need to be configured on the system from the employee’s Classification screen. Please see the following article for more on this aspect:

Certain types of income, such as commission and annual payments, will also be reported under different codes, so we recommend using system items wherever possible. However, if you do require a custom item, you can create one by going to Settings > Custom Items > Add > Income.


An allowance is an amount of money given to an employee by an employer to incur business-related expenditure on the employer’s behalf, without an obligation on the employee to prove or account for such expenditure. The amount of the allowance is based on the expected expenditure.

Generally, allowances are fully taxable and are reported under code 3713. Any items of this nature can be added as custom items by going to Settings > Custom Items > Add > Allowance.

However, certain allowances have special tax treatment and reporting requirements. SimplePay has system items for these allowances, which should be used to ensure that they are reported and taxed in line with SARS’s requirements.

  • Travel Allowance can be added by clicking on Add (next to Regular Inputs).
  • Subsistence Allowance (local and / or international) can be added by clicking Add (next to Payslip Inputs).
  • Uniform Allowance can be added by clicking Add (next to Payslip Inputs). This allowance will be tax-free where it is a condition of employment that an employee is required whilst on duty to wear a special uniform which is clearly distinguishable from ordinary clothing, and the allowance is paid to the employee to enable them to purchase such a uniform. This tax-free allowance will be reported under code 3714.

For more information about system items for allowances, please refer to the following article:


A benefit is the monetary value of anything given to the employee by the employer as a perk of or by virtue of the employment relationship or as a reward for services rendered and includes any non-statutory contributions made by the employer on the employee’s behalf. The value of any benefits is fully taxable and must be included when determining an employee’s gross taxable income.

In general, benefits will be reported under code 3801 and this applies to any custom benefit created on SimplePay. To create a custom benefit:

  • Go to Settings > Custom Items > Add > Benefit.

Certain benefits have particular tax treatment and / or different IRP5 codes and, as such, are included as system items on SimplePay. The following common benefits have system items.

  • Employer Loan
  • Company Car (use of a motor vehicle)
  • Medical Aid contributions paid by the employer
  • Pension, Provident and Retirement Annuity Fund contributions paid by the employer

All of the above items can be added by clicking on Add (next to Regular Inputs) on an employee’s profile.

For more information on these, refer to the following help pages:

Taxable Income Deduction

Employees may be entitled to certain reductions in their remuneration for the purposes of calculating tax. Taxable income deductions are subtracted from an employee’s remuneration to calculate the amount on which their tax liability will be calculated. These are, therefore, deductions from gross pay and must be distinguished from normal deductions (such as tax and UIF), which reduce nett pay.

Retirement fund contributions are the most common reason that employees receive a taxable income deduction and SimplePay has items for each of the three fund types: pension, provident and retirement annuity fund. The relevant system item (linked to above) should always be used and can be added to an employee’s payslip by clicking on Add (next to Regular Inputs) and selecting it from the Deductions section.

It is not possible to create custom items of this type.

Employer Contribution

An employer contribution on SimplePay refers to any contribution, which the employer is required to make by law, such as UIF and SDL. These amounts are not considered fringe benefits and do not have any impact on an employee’s pay. SimplePay calculates these contributions automatically based on the employee’s set up and payslip items.

If necessary, a custom item can be created by going to Settings > Custom Items > Add > Employer Contribution.


A reimbursement of business-related expenditure occurs when an employee has incurred and paid for business-related expenses on behalf of an employer, without being given an allowance or an advance, and is subsequently repaid for the exact expenditure. The employee must produce supporting documentation in the form of receipts.

Reimbursements for business expenses are non-taxable and any custom items created will be treated as such. Custom reimbursements can be created by going to Settings > Custom Items > Add > Reimbursement.