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. A bursary for your own studies is fully exempt, with no rand cap. A bursary for a relative is exempt up to R30,000/year for basic education (NQF levels 1–4) or R90,000/year for higher education (NQF level 5 and above), only if your remuneration is below R900,000/year. Any amount above these thresholds is a taxable fringe benefit under code 3820.
Also useful from PayTools
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.
A bursary for the employee's own studies is fully exempt, with no rand cap, regardless of level. A bursary for a relative is capped, and the cap depends on the level of study: R30,000 per year for basic education (school level, NQF levels 1–4) and R90,000 per year for higher education (certificates, diplomas and degrees, NQF level 5 and above) — figures effective from 1 March 2026, up from R20,000 and R60,000 previously. An additional condition applies to relative bursaries — the employee's own remuneration must be below R900,000 per year (up from R600,000) for any exemption to apply at all. Above that income threshold, a relative's bursary is fully taxable regardless of amount.
| Who is Studying | Exempt Amount | Example Bursary | Code 3820 Taxable |
|---|---|---|---|
| Employee's own studies (any level) | Fully exempt, no cap | R80,000 | R0 (fully exempt) |
| Relative — basic education (NQF levels 1–4, school) | R30,000/year | R25,000 | R0 (within limit) |
| Relative — basic education (NQF levels 1–4, school) | R30,000/year | R38,000 | R8,000 |
| Relative — higher education (NQF level 5+, degree/diploma) | R90,000/year | R85,000 | R0 (within limit) |
| Relative — higher education (NQF level 5+, degree/diploma) | R90,000/year | R110,000 | R20,000 |
| Relative bursary — employee earns <R900,000/year | Same as above | R90,000 degree | R0 (within limit) |
| Relative bursary — employee earns ≥R900,000/year | No exemption | R90,000 degree | R90,000 (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 R110,000 toward an employee's child's university tuition under a genuine, conditional bursary scheme, and the employee earns R450,000 a year — below the R900,000 relative-bursary threshold. The R90,000 higher-education exemption covers most of the bursary, leaving R20,000 (R110,000 − R90,000) as a taxable fringe benefit under code 3820. That R20,000 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. Had this same R110,000 bursary instead been for the employee's own studies rather than a relative's, the full amount would be exempt, since the employee's-own-studies exemption has no rand cap.
If the same employee earned R950,000 a year instead — above the R900,000 threshold for bursaries paid to relatives — none of the R110,000 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 education. A bursary for your own studies is fully exempt from fringe benefit tax, with no rand cap. A bursary for a relative (spouse, child, or other dependant) is exempt up to R30,000 per year for basic education (NQF levels 1–4, equivalent to school Grade R through Grade 12) or R90,000 per year for higher education (NQF level 5 and above) — but only if your own remuneration is below R900,000/year. Any relative-bursary 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?
It depends on who is studying. A bursary for the employee's own studies is fully exempt, at any amount, with no rand cap. A bursary for a relative is capped: R30,000 per year for basic education (school level, NQF levels 1 to 4) and R90,000 per year for higher education (post-school qualifications, NQF level 5 and above) — for the 2026/2027 tax year, up from R20,000 and R60,000 previously. A relative's bursary of R80,000 for a degree programme is fully exempt (under the R90,000 cap). A relative's bursary of R110,000 for the same programme would have R20,000 (the excess above R90,000) 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 R900,000 per year in remuneration (2026/2027 tax year, up from R600,000). The same exempt thresholds apply: R30,000 for basic education and R90,000 for higher education. If the employee earns R900,000 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 two cases are treated differently. A bursary for your own studies is fully exempt with no rand cap. A bursary for a relative is only exempt if your remuneration is below R900,000 per year, and even then is capped at R30,000 (basic education) or R90,000 (higher education) — the taxable excess above whichever cap applies appears as code 3820.
What is NQF and how does it affect my bursary exemption?
NQF stands for the National Qualifications 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. For a relative's bursary, the qualification level determines which exempt threshold applies: R30,000 for levels 1–4, or R90,000 for level 5 and above. A bursary for the employee's own studies is exempt in full regardless of level.
Does code 3820 appear on my IRP5?
Only if there is a taxable amount. A bursary for your own studies never generates a code 3820 amount, regardless of size, since it has no rand cap. A bursary for a relative only appears as code 3820 if it exceeds the applicable threshold — for example, if your employer pays R110,000 toward a relative's degree, the R20,000 above the R90,000 exemption 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.