Eployee Tax – RESTRAINT OF TRADE PAYMENTS

Reference to the Act             

Remuneration definition in Paragraph 1 of the 4th Schedule

Paragraph (cA) of the definition of gross income in Section 1

Meaning                                    

Payments in respect of a restraint of trade (i.e. sterilisation of a person’s income

earning capacity) are included in the definition of remuneration.

Where a payment in respect of a restraint of trade was received or accrued, it will be taxable in full if it was received by or accrued to a natural person, a labour broker not in possession of an exemption certificate or a personal service provider.

Employees’ Tax                      

Employees’ Tax from restraint of trade payments must be calculated in the same

manner as tax on a bonus.

IRP5/IT3(a) detail                    

Restraint of trade payments must be reflected under code 3613 on the certificate

Comments are closed.