Question:
My wife resigned two months after returning from maternity leave. She had to refund her salary earned during maternity leave to the employer although her IRP5 does not reflect the refund, only the full salary earned. The tax form makes provision for deduction code 4042 (amounts refunded in terms of Section 11(nA) and 11(nB)), but SARS rejected it.

Is this correct and why?

Answer:
The reason for the rejection is probably the discrepancy between the IRP5 issued by the employer and the information provided by the taxpayer on the tax return. The code under which the deduction is claimed seems to be the correct one.

I would request an amended IRP5 from the employer to reflect the refunded amount and submit the rectified one to SARS.

SARS probably looked at the return, compared it to the employer?s IRP5 and rejected it solely because it didn?t match up.

A person does not have to pay tax on a portion of salary that was not received!

Just check that the salary refunded to the employer was actually refunded in the same tax year. If not then it will only be allowed as a deduction in the following tax period.

acsis Limited is an authorised financial services provider. The response to the question covers some of the issues in a general and factual manner and does not constitute advice. It is important to consult with a financial planner who, after an analysis of the individuals? personal needs, goals and circumstances, will be able to provide comprehensive and appropriate advice.