What is Code 3606 on a South African Payslip?
Your commission income explained — how PAYE is calculated on it, the 50% rule that lets you claim business expenses, and what it means for your IRP5.
3606Code 3606 is your commission income — performance-based pay reported separately from your regular salary on your payslip and IRP5. It is fully taxable under PAYE. If commission makes up more than 50% of your total remuneration, you qualify to claim business expenses against it at year-end.
What Code 3606 Means
Code 3606 is an income code in the 3600 series, sitting alongside your regular salary (3601), bonuses (3605), and overtime (3607). It captures commission income — amounts earned through performance, sales, or deal-based pay structures rather than a fixed monthly salary.
SARS keeps commission income under a separate code for two reasons. First, it enables the correct PAYE calculation when commission amounts vary month to month. Second — and more importantly for employees — it allows SARS to identify which employees qualify as commission earners under Section 23(m) of the Income Tax Act, giving them the right to deduct business expenses against their commission income that regular salaried employees cannot claim.
Your annual IRP5 will show code 3606 separately from code 3601. The combined total of both (plus any other income codes) makes up your gross remuneration for the year.
How PAYE Is Calculated on Commission
Commission does not receive preferential tax treatment — it is taxed at the same SARS progressive rates as salary. Your employer typically uses the aggregation method each month: your commission is added to your projected annual salary, the total annual PAYE is calculated on the combined figure, and the difference between what has already been deducted from salary and the new combined total is deducted from your commission payment.
This means commission is taxed at your marginal rate — the rate that applies to the top slice of your income. For most commission earners this is 26% to 31%, and for higher earners up to 39% or 41%.
| Item | Amount |
|---|---|
| Monthly base salary (code 3601) | R15,000 |
| Monthly commission earned (code 3606) | R20,000 |
| Annual projected income (× 12) | R420,000 |
| Annual PAYE on R420,000 | R75,825 |
| Monthly PAYE | R6,319 |
| Commission as % of total remuneration | 57% — qualifies as commission earner |
| Monthly take-home | R28,504 (before UIF) |
The 50% Commission Earner Rule
This is the most important tax provision for commission workers in South Africa. Under SARS rules, if your code 3606 commission exceeds 50% of your total remuneration for the tax year, you are classified as a commission earner — and this unlocks the right to deduct genuine business expenses against your commission income on your annual ITR12 return.
Add your total code 3606 commission for the tax year. Divide it by your total remuneration (3601 + 3606 + all other income codes). If the result exceeds 50%, you are a commission earner and can claim business expenses. If it is 50% or less, you are treated as a regular employee and cannot claim these deductions.
What Business Expenses Commission Earners Can Claim
If you qualify under the 50% rule, you can deduct the following expenses directly related to earning your commission when you file your annual return:
- Vehicle costs — actual costs via the SARS cost table (fixed + fuel + maintenance), or the simplified R4.95/km rate with a logbook
- Cell phone and data — the business-use portion of your monthly bills
- Home office costs — if you work from a dedicated home office space
- Stationery and consumables — business-related printing, paper, pens
- Other direct expenses — any costs genuinely incurred in earning your commission, with receipts
Commuting costs and personal expenses are never deductible. SARS may request supporting documentation for any claimed expense, so keep records throughout the year. Use our Commission Tax Calculator to estimate your net take-home after PAYE on your commission income.
Frequently Asked Questions
What does code 3606 mean on my payslip?
Code 3606 is your commission income — performance-based pay reported separately from your regular salary. It is fully taxable under PAYE at your marginal rate. The separate code allows SARS to identify commission earners who qualify to claim business expenses at year-end under the 50% rule.
Is commission taxed differently from salary?
Commission is subject to the same SARS progressive tax rates as salary — no preferential rate applies. The key difference is that qualifying commission earners (more than 50% of remuneration from code 3606) can deduct business expenses against their commission income on their annual return, which salaried employees cannot do.
What is the 50% commission earner rule?
If your total code 3606 commission for the tax year exceeds 50% of your total remuneration, you qualify as a commission earner under Section 23(m) of the Income Tax Act. This entitles you to claim business expenses related to earning the commission on your ITR12. If commission is 50% or less of total remuneration, you are treated as a regular employee for expense purposes.
What expenses can commission earners claim?
Qualifying commission earners can claim vehicle costs (logbook-based using the SARS R4.95/km rate or cost table), cell phone business use, home office costs, and other expenses directly incurred in earning commission. Commuting costs and personal expenses are not claimable. All claims require supporting receipts and records — SARS may request proof on audit.
Does code 3606 appear separately on my IRP5?
Yes. Your annual commission total appears as a separate code 3606 entry on your IRP5, distinct from your code 3601 salary. SARS uses this to assess whether you qualify as a commission earner. If your commission was incorrectly included in code 3601, request a corrected IRP5 from your payroll department before filing your return.
How is PAYE calculated on commission each month?
Your employer uses the aggregation method: commission is added to your projected annual salary, annual PAYE is calculated on the combined figure, and the PAYE already deducted on salary year-to-date is subtracted. The difference is deducted from your commission payment. This means commission is taxed at your marginal rate — typically 26% to 41% depending on your total income.