May I please receive a response?

Hi just looking for solution for you 

Hi 

Confirm whether the June 2021 award was cash or an asset/voucher, and whether the exemption was applied at that point — that single fact determines the answer to

Question 1. For certainty on borderline cases, we always recommend confirming with SARS or a registered tax practitioner.

The updated SARS Guide for Employers in respect of Fringe Benefits (PAYE-GEN-01-G02) reflects the new R16 000 limit.

Hope this helps!

Hello Marie Hof,

Below is an excerpt from the 2026/2027 tax year payroll guide, regarding qualifying long service awards. This year, the exemption limit increased from R5 000 to R16 000.

To answer your questions:

1.  If the employee received the 1st long service award on 20 years (... initial unbroken period of at least 15 years...), the next qualifying award where the exwemption applies is on 30 years (... any subsequet unbroken period of at least 10 years).

1. Is the R15,500 (20-year award in June 2026) tax-free because the law only changed in March 2022?

No, since the employee received a qualifying long service award in 2021 (where the exemption limit was R5000), the employee will only be able to qualify for the exemption again on an award paid on 25 years service (2031).

A qualifying award is:

• the initial unbroken 15 years of service; and
• each subsequent unbroken 10 years of service (25 years, 35 years, 45 years, etc.).

The award paid on 20 years is fully taxable.

2. Does the R16,000 exemption apply only once, or to every qualifying long-service award?

The R16,000 exemption (As from 2026/2027) applied to each qualifying long-service award, not once over the employee's lifetime.

A qualifying award is:

• the initial unbroken 15 years of service; and
• each subsequent unbroken 10 years of service (25 years, 35 years, 45 years, etc.).

It isn't a lifetime cumulative exemption.

3. If the employee received the 15-year award in March 2022, does the 20-year award in March 2027 also qualify?

No, assuming the "20-year" award is exactly at 20 years' service.

The legislation defines a qualifying long-service award as:

• the initial 15 years of unbroken service; and
• every subsequent 10 years of unbroken service.

That means qualifying milestones are:

• 15 years 
• 25 years 
• 35 years 
• 45 years 

A 20-year service award is not a qualifying long-service award for the exemption, even if the employer chooses to give one. It would generally be fully taxable

Good morning Francois,

Thank you very much for clarifying all my questions.

On question 1 though, the employee received a cash award for 15 years' service in June 2021 and the R5000.00 exemption only applied to an acquisition of an asset before March 2022. The employee was taxed in full on that 15 years' service cash award.

Therefore, since the cash awards had no exemption back in June 2021 is it a case of the employee cannot now want their 20 years' service cash award tax free due to the new legislation coming into affect in March 2022 and they consider their 15 years as "falling within" the 20 years they are at now?

Hi Marie Hof,

For a specific intepretation on a scenario, we recommend to contact a tax advisor for guidance and application.