What is Code 3712 on a South African Payslip?
Telephone and cell phone allowance explained — why it is fully taxable, how a company-provided phone differs, when business call costs can be deducted, and what appears on your IRP5.
3712Code 3712 is a telephone or cell phone allowance — a fixed monthly amount paid for using your personal phone for business. There is no SARS prescribed tax-free rate. The full allowance is taxable income and PAYE is deducted monthly. A company-provided phone used for business is not taxable at all.
What Code 3712 Means
Code 3712 is a telephone or cell phone allowance — an amount your employer pays you monthly to cover the business-related use of your personal phone, data, or landline. It is common in roles where employees are expected to be reachable outside office hours, make client calls from their personal number, or use their own device rather than a company-issued phone.
Despite the genuine business purpose, SARS treats the full allowance as taxable income. There is no prescribed exempt amount for telephone allowances — the entire monthly payment is subject to PAYE at your marginal rate. This is the same treatment as computer allowances (code 3711) and entertainment allowances (code 3706): all three are fixed cash payments with no tax-free component.
The most tax-efficient alternative is a company-provided phone. A phone issued by the employer for business use is not a taxable fringe benefit, meaning the employee receives the full value without any PAYE cost. Where employers pay a cash phone allowance instead, the employee bears the tax cost on what is effectively a work tool.
Allowance vs Company-Provided Phone
Code 3712 Cash Allowance
Fixed monthly payment for using personal phone. Fully taxable — PAYE deducted at marginal rate. At 26% tax rate: R800/month allowance yields only R592 in hand.
Company-Provided Phone
Employer-owned device for business use. Not a taxable fringe benefit. Employee gets full benefit at zero PAYE cost. Contract and device remain on company account.
How It Affects Your Take-Home Pay
| Item | Amount |
|---|---|
| Monthly salary (code 3601) | R22,000 |
| Monthly phone allowance (code 3712) | R800 |
| Total monthly remuneration for PAYE | R22,800 |
| Approximate marginal tax rate | 26% |
| PAYE on phone allowance | ≈R208/month |
| Net received from R800 allowance | ≈R592/month |
Over a year, R2,496 in PAYE is paid on what is intended to cover a business expense. If the employer provided a company phone contract instead, the full R800-equivalent value would be delivered without tax. Use our PAYE Calculator to see the impact at your income level.
If more than 50% of your total remuneration comes from commission (code 3606), you qualify as a commission earner under SARS rules and can deduct the business-use portion of your phone costs on your annual ITR12 return. Keep your itemised phone bills for the year and calculate the business percentage. For salaried employees (code 3601 only), Section 23(m) of the Income Tax Act restricts most expense deductions — phone costs are generally not deductible regardless of how much business use occurs. Consult a tax practitioner for your specific situation.
Frequently Asked Questions
What does code 3712 mean on my payslip?
Code 3712 is a telephone or cell phone allowance — a fixed monthly amount paid to cover business use of your personal phone. It is fully taxable income. PAYE is deducted at your marginal rate on the full amount each month. There is no SARS prescribed tax-free rate for telephone allowances. The gross amount appears on your IRP5 as part of your total remuneration.
Is a cell phone allowance taxable in South Africa?
Yes — fully taxable. There is no SARS prescribed exempt amount for telephone allowances, unlike travel or subsistence. The entire code 3712 allowance is subject to PAYE at your marginal rate monthly. A company-provided phone for business use is not taxable — the cash allowance alternative always costs more in tax.
Is a company phone a taxable fringe benefit?
No — an employer-provided phone used primarily for business is not a taxable fringe benefit. SARS excludes business assets provided by the employer from fringe benefit taxation. Only where the phone is issued primarily for personal use would a fringe benefit value be imputed. This makes a company contract far more tax-efficient than a code 3712 cash allowance.
Can I claim a deduction for my business phone costs?
Commission earners (more than 50% income from code 3606) can deduct the documented business-use portion of their phone costs on their annual return. Keep itemised bills and calculate the business percentage. For salaried employees (code 3601 only), Section 23(m) restricts most expense deductions — phone costs are generally not deductible. Consult a registered tax practitioner for your specific situation.
What is more tax-efficient — code 3712 or a company phone?
A company-provided phone is always more tax-efficient. It delivers full value without any PAYE. A code 3712 allowance is taxed at your marginal rate — R800/month at 26% becomes R592 in hand, costing R2,496 per year in unnecessary PAYE. Where possible, negotiate for a company phone contract rather than a taxable monthly cash allowance.
Does code 3712 appear on my IRP5?
Yes. The total telephone allowance paid during the tax year appears as code 3712 on your IRP5 and forms part of your gross remuneration. PAYE was deducted monthly on the full amount. Commission earners claiming a deduction for business phone costs reflect this in the deductions section of their ITR12 return.