IRP5 Certificate Explained

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The IRP5 certificate is certificate which has a a summary of all the remuneration  provided to an employee by an employer during a tax year. This will exclude amounts paid outside the payroll, for example, the reimbursement of a pure non-travel business expense that is paid to the employee via the general ledger.

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An employer is obliged by law to issue IRP5 certificates to all its employees after payroll reports have been submitted to SARS (in the form of an EMP501 declaration). The information from the IRP5 will then be prepopulated when compiling the individual’s ITR12 on eFiling. However, sometimes there are issues that arise in practice, which require caution. SARS has the right to hold a taxpayer (in this case an employee) liable for any outstanding tax debt or tax returns, regardless of the circumstances.

Here are some examples of the categories of source codes that one might typically encounter on an IRP5:

• Salary payments: source code 3601
• Bonus payments: source code 3605
• Travel allowance payments: source code 3701
• Other (i.e. miscellaneous) allowance payments: source code 3713
• Commission payments: source code 3606
• Medical fringe benefit payments: source code 3810

IRP5 also employee’s salary deductions, as set-off against the tax calculation. This is done to reflect a series of calculations that applies before tax was deducted tax from your income amount. Examples of typical deduction source codes include the following:

• Employee pension contributions: source code 4001
• Employee retirement annuity contributions: source code 4006
• Employee provident fund contributions: source code 4003
• Medical aid contributions: source code 4005

To verify whether your employer declared the tax amount that was deducted from your salary, your IRP5 should reflect the primary PAYE source code 4102.