What is Code 3820 on a South African Payslip?
Taxable bursary fringe benefit explained — the SARS exempt thresholds, when bursary amounts become taxable, relative bursaries, and what appears on your IRP5.
3820Code 3820 is the taxable portion of a bursary or scholarship your employer provides for further education. Bursaries are exempt from fringe benefit tax up to R20,000 per year for basic education (NQSF levels 1–4) and R60,000 per year for higher education (NQSF level 5 and above). Any amount above these thresholds is a taxable fringe benefit under code 3820.
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What Code 3820 Means
Code 3820 covers the taxable slice of a bursary or scholarship your employer funds for education — either your own studies or, under certain conditions, a relative's. SARS wants to encourage employers to invest in education, so the Seventh Schedule exempts bursaries from fringe benefit tax up to a threshold each year. Anything paid above that threshold is treated as ordinary taxable income and appears under code 3820 on your IRP5.
The exempt amount depends on the level of study: R20,000 per year for basic education (school level, NQSF levels 1–4) and R60,000 per year for higher education (certificates, diplomas and degrees, NQSF level 5 and above). Where the bursary is for a relative rather than the employee, an additional condition applies — the employee's own remuneration must be below R600,000 per year for any exemption to apply at all. Above that income threshold, a relative's bursary is fully taxable regardless of amount.
| Education Level | Exempt Amount | Example Bursary | Code 3820 Taxable |
|---|---|---|---|
| Basic education (NQSF levels 1–4, school) | R20,000/year | R15,000 | R0 (within limit) |
| Basic education (NQSF levels 1–4, school) | R20,000/year | R28,000 | R8,000 |
| Higher education (NQSF level 5+, degree/diploma) | R60,000/year | R55,000 | R0 (within limit) |
| Higher education (NQSF level 5+, degree/diploma) | R60,000/year | R80,000 | R20,000 |
| Relative bursary — employee earns <R600,000/year | Same as above | R60,000 degree | R0 (within limit) |
| Relative bursary — employee earns ≥R600,000/year | No exemption | R60,000 degree | R60,000 (fully taxable) |
For the exemption to apply, the bursary must be a genuine bursary for recognised educational study — not a disguised salary supplement. SARS requires that the bursary is conditional on the employee (or relative) being enrolled at a recognised educational institution and making satisfactory academic progress. If the employee is required to repay the bursary if they leave before a specified period, this is a bona fide condition consistent with a genuine bursary.
Example Calculation
An employer pays R70,000 toward an employee's child's university tuition under a genuine, conditional bursary scheme, and the employee earns R450,000 a year — below the R600,000 relative-bursary threshold. The R60,000 higher-education exemption covers most of the bursary, leaving R10,000 (R70,000 − R60,000) as a taxable fringe benefit under code 3820. That R10,000 is added to the employee's taxable income for the tax year in which the bursary was paid, and PAYE is adjusted accordingly by payroll.
If the same employee earned R650,000 a year instead — above the R600,000 threshold for bursaries paid to relatives — none of the R70,000 would be exempt, and the full amount would be taxable under code 3820.
Frequently Asked Questions
What does code 3820 mean on my payslip?
Code 3820 is the taxable portion of a bursary or scholarship your employer provides for your further education. SARS exempts bursaries up to R20,000 per year for basic education (NQSF levels 1–4, equivalent to school Grade R through Grade 12) and R60,000 per year for higher education (NQSF level 5 and above, equivalent to certificates, diplomas and degrees). Any amount above these thresholds is a taxable fringe benefit that appears under code 3820 on your IRP5.
How much of a bursary is tax-free?
The Seventh Schedule provides two exempt amounts. For basic education (school level, NQSF levels 1 to 4): R20,000 per year is exempt from fringe benefit tax. For higher education (post-school qualifications, NQSF level 5 and above): R60,000 per year is exempt. These thresholds apply per tax year. A bursary of R50,000 for a degree programme is fully exempt. A bursary of R80,000 for the same programme would have R20,000 (the excess above R60,000) as a taxable fringe benefit under code 3820.
Are bursaries for employees relatives also tax-free?
Yes, under specific conditions. The Seventh Schedule extends the bursary exemption to bursaries for relatives of employees, but only if the employee earns less than R600,000 per year in remuneration. The same exempt thresholds apply: R20,000 for basic education and R60,000 for higher education. If the employee earns R600,000 or more per year, bursaries for relatives are fully taxable as a fringe benefit under code 3820.
Does code 3820 only apply if I am the student?
No — code 3820 can also arise when your employer funds the education of your dependants or relatives. The bursary exemption applies to both the employee's own studies and qualifying relative bursaries. The distinction is that relative bursaries are only exempt if the employee's remuneration is below R600,000 per year. Both cases use the same exempt thresholds (R20,000 basic, R60,000 higher education) and the taxable excess appears as code 3820.
What is NQSF and how does it affect my bursary exemption?
NQSF stands for the National Qualifications Sub-Framework — South Africa's system for classifying educational qualifications by level. Levels 1 to 4 correspond to basic education (school qualifications up to Matric/Grade 12). Level 5 and above covers higher education — from short courses and certificates through to degrees and postgraduate qualifications. The level of your qualification determines which exempt threshold applies: R20,000 for levels 1–4, or R60,000 for level 5 and above.
Does code 3820 appear on my IRP5?
Only if your bursary exceeds the exempt threshold. If your employer pays R60,000 for your degree and the exemption covers this fully, no code 3820 should appear. If the bursary is R75,000, the R15,000 excess appears as code 3820 on your IRP5 as a taxable fringe benefit. PAYE is deducted monthly on the proportional taxable value as the bursary is paid.