Print Page   |   Report Abuse
News & Press: Individuals Tax

Binding Class Ruling 027:No need for waitrons to declare tips

10 August 2011   (0 Comments)
Posted by: SAIT Technical
Share |

Business Report

No need for waitrons to declare tips - SAPA

Waitrons can keep their hard-earned tips for themselves and don’t have to worry about the tax man, a recent South African Revenue Service ruling has confirmed.

According to the last week’s ruling, the transfer of tips handed over to an employer by an employee for "safekeeping” did not constitute a payment of remuneration.

"The Binding Class Ruling issued by Sars declared that the transfer of tips (handed over to the employer by the employees for safekeeping in terms of the employer’s proposed group tips policy) does not constitute a payment of remuneration by the employer,” said Gillian Lumb, an employment law director at law firm Cliffe Dekker Hofmeyr.

"Binding class rulings are intended to promote clarity on the interpretation and application of the tax laws to a class of persons who apply for a ruling in respect of a proposed transaction to which it is a party.” Confusion had arisen over whether tips kept by employees were taxable. Sars confirmed they were not. An employment associate at the firm, Pranisha Maharaj, said the ruling was valid for five years as of August 2010.

She said the proposed group tips policy sought to address the security risk of having employees take receipt of tips during their working hours. "In terms of the policy, tips are seen as gratuitous payments to which employees have no entitlement or an expectation of receipt as a part of the performance of their duties,” Maharaj said.

To access the Binding Class Ruling 027, click here


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

Membership Management Software Powered by®  ::  Legal