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.
Commission (Code 3606) vs Salary (Code 3601) — Key Tax Differences
| Factor | Salary — code 3601 | Commission — code 3606 |
|---|---|---|
| Tax rates | PAYE at marginal rate | PAYE at marginal rate (same brackets) |
| Monthly PAYE | Predictable — fixed each month | Variable — recalculated on each commission payment |
| Expense deductions | Not permitted under Section 23(m) | Permitted if commission > 50% of total remuneration |
| IRP5 reporting | Single line under code 3601 | Separate line under code 3606 alongside 3601 |
| SARS directive | Not applicable | Available — apply on eFiling for a consistent % rate |
Commission is taxed at the same SARS progressive rates as salary — there is no special commission tax rate. The difference is in how PAYE is calculated month-to-month on a variable amount.
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What Code 3606 Means
Code 3606 is an income code in the 3600 series, alongside salary (3601), bonuses (3605), and overtime (3607). It captures commission income — pay earned through performance, sales, or deal-based structures rather than a fixed monthly salary.
SARS keeps commission separate from salary for two reasons: it allows correct PAYE calculation on a variable amount, and it identifies which employees qualify as commission earners under Section 23(m) of the Income Tax Act — with the right to deduct business expenses that salaried employees cannot claim.
Your IRP5 shows code 3606 separately from 3601; together with any other income codes, they make up your gross annual remuneration.
How PAYE Is Calculated on Commission
Commission gets no preferential tax treatment — it's taxed at the same SARS progressive rates as salary. Employers typically use the aggregation method: commission is added to your projected annual salary, PAYE is recalculated on the combined figure, and the difference from what's already been deducted is taken from the 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 | R73,617 |
| Monthly PAYE | R6,135 |
| Commission as % of total remuneration | 57% — qualifies as commission earner |
| Monthly take-home | R28,865 (before UIF) |
The 50% Commission Earner Rule
This is the most important tax rule for commission workers. If your code 3606 commission exceeds 50% of total remuneration for the tax year, you're 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 3606 commission for the tax year and divide by total remuneration (3601 + 3606 + other income codes). Above 50%, you qualify as a commission earner and can claim business expenses; at or below 50%, you're treated as a regular employee.
What Business Expenses Commission Earners Can Claim
If you qualify under the 50% rule, you can deduct these expenses directly related to earning commission on 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 and personal expenses are never deductible — keep records throughout the year, as SARS may request documentation. Use our Commission Tax Calculator to estimate your net take-home.
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.
How is commission income taxed in South Africa in 2026?
Commission income (code 3606) is taxed at the same SARS progressive income tax rates as salary — there is no special commission tax rate. Your employer (or principal) calculates PAYE on each commission payment separately, adding it to your basic salary for that month and applying the 2026/2027 tax brackets. Because commission varies month to month, your PAYE will fluctuate accordingly. If commission makes up more than 50% of your total remuneration, you qualify under Section 23(m) to deduct qualifying work-related expenses (travel, cell phone, office costs) against your commission income at annual tax return time, potentially generating a SARS refund.