A taxpayer is paying for a study loan to an employee. It will be paid to her as an earning which is to be used for her son’s studies. The employee is not required to repay the loan. The loan amount is R 166 000 for an NQF level 7 and her son is not disabl
Author: The Payroll Authors Group of South Africa
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
The IRP5 codes applicable to bursaries are as follows:
• 3809: Taxable Non-disabled NQF 1-4
• 3815: Non-taxable Non-disabled NQF 1-4
• 3820: Taxable Non-disabled NQF 5-10
• 3821: Non-taxable Non-disabled NQF 5-10
• 3829: Taxable Disabled NQF 1-4
• 3830: Non-taxable Disabled NQF 1-4
• 3831: Taxable Disabled NQF 5-10
• 3832: Non-taxable Disabled NQF 5-10
The only time the bursary will be allocated to the non-taxable codes (exempt) is if these conditions are met, namely:
• repayment of bursary by the employee to the employer
• relative – not exempt if the threshold of remuneration of the employee is not met
You did not provide information in respect of the reason why the bursary is tax exempt, therefore I cannot comment on this. However, should the bursary be exempt, then code 3821 should be used on the IRP5. In case it is not exempt, then code 3820 should be used.