Processing a qualifying long-service award as cash

How to capture qualifying long-service cash awards in Sage VIP Classic or Sage VIP Premier.

Employers often reward employees for long service or bravery.

South African tax law allows a tax exemption on service awards up to a specific limit. For more information on the limit, refer to the latest payroll tax pocket guide.

To qualify, the employee meets the following requirements:

• an initial unbroken service period of at least 15 years
•  subsequent unbroken service period of at least 10 years (after initial award)

Review the company setup

You'll need to check for the following definitions on your payroll company:

1. Access your South African company from the Company Listing Screen.
2. From the Main Menu, go to Payroll, then select Definitions.
3. Select Earning Definitions.
4. Review the earnings and confirm the following definitions exist.
   • 3622 – Monthly award (Monthly/weekly/bi-weekly taxable)
   • 3622 – Once-off reward (Periodic taxable)
   • 3622 – Non-taxable (never taxable)
5. Click Close to return to the Main Menu.

Process the award on the payslip

1. From the Main Menu, go to Payroll, then select Payslip Screen.
2. Select the employee from the list and click Continue. 
3. Select the Earnings tab.
4. Process the long service award earnings:
   • Enter the taxable portion of the award on the taxable earning line.
   • Enter the non-taxable portion of the award on the never taxable earning line.
5. Click Close to save the payslip input.
6. Click Close to return to the Main Menu.

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