Q: An employee has been medically
boarded and will, as a result, receive income from the employer. How is this
A: In our view
such an amount will be taxed as a "severance benefit" as defined in section
1 ITA and the tax rate schedule applicable to severance amounts will apply. As
this is a para d(i) of the ‘gross income’ amount the employer must request a
directive from SARS per para 9(3) of the Fourth Schedule. The amount is then
disclosed under IRP5 code 3901 and the tax withheld if any under code 4115.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.
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