What is Code 4005 on a South African Payslip?
Your employee medical aid contribution explained — why it is not tax-deductible, how it links to the Section 6B excess credit, and how it differs from codes 3810 and 4474.
4005Code 4005 is your employee medical aid contribution — the amount you personally pay toward your medical aid each month, deducted from your net pay after tax. It is not tax-deductible but contributes to the Section 6B excess medical expenses credit that may reduce your tax at year-end.
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What Code 4005 Means
Code 4005 is a deduction code in the 4000 series. It records your employee contribution to a registered medical aid scheme — the portion of the monthly medical aid premium that you personally pay, as opposed to what your employer pays on your behalf.
Unlike pension contributions (code 4001) which reduce your taxable income before PAYE is calculated, your code 4005 medical aid contribution is deducted from your net take-home pay after all taxes have been withheld. This is a common source of confusion — employees often assume medical aid contributions are tax-deductible, but the tax benefit for medical aid comes through a different mechanism: the Section 6A tax credit (code 4474) and potentially the Section 6B excess credit.
The Three Medical Aid Codes — Complete Picture
Understanding code 4005 requires seeing how it fits with the other two medical aid codes. Together, 3810, 4005, and 4474 tell the complete story of your medical aid tax position.
The Three Medical Aid Codes on Your IRP5
Employer contribution (fringe benefit) — your employer's monthly payment to the medical aid. Added to your taxable income, increasing PAYE. Appears in the income section of your IRP5.
Employee contribution (you pay this) — your personal monthly payment deducted from net pay after tax. Not tax-deductible. Appears in the deductions section of your IRP5. Feeds into Section 6B at year-end.
Medical aid tax credit (Section 6A) — a fixed monthly credit applied directly to your PAYE. R376/month for main member, R376 for first dependant, R254 for each additional dependant (2026/2027). Reduces PAYE — not taxable income.
Section 6B — How Code 4005 Creates a Year-End Credit
While code 4005 is not immediately tax-deductible, it forms part of the Section 6B excess medical expenses credit calculation on your annual tax return. This is the one mechanism through which your own contribution can generate a tax benefit.
SARS calculates Section 6B for under-65 taxpayers without a qualifying disability in two steps: first, take the combined total of your employer (3810) and employee (4005) medical aid contributions for the year and subtract four times your annual Section 6A credit. Second, subtract 7.5% of your taxable income from that result. Only if what's left is still positive can you claim 25% of it as an additional tax credit — and for most working-age earners, the 7.5%-of-income subtraction absorbs the excess entirely, leaving no Section 6B credit at all. A different formula with no 7.5% floor applies if the taxpayer (or their spouse or a dependant) is 65 or older, or has a disability.
| Item | Example (main member + 1 adult dependant) |
|---|---|
| Employer contribution per month (code 3810) | R2,000 |
| Employee contribution per month (code 4005) | R1,500 |
| Total monthly premium | R3,500 |
| Annual total contributions (× 12) | R42,000 |
| Annual Section 6A credit (R752 × 12) | R9,024 |
| 4× annual 6A credit (the threshold) | R36,096 |
| Contributions in excess of 4× threshold | R5,904 |
| Employee's annual taxable income (assumed, under 65, no disability) | R360,000 |
| Less: 7.5% of taxable income | -R27,000 |
| Amount eligible for the 25% credit | R0 (the R5,904 excess is fully absorbed by the 7.5% floor) |
| Section 6B credit / additional refund at year-end | R0 |
This is the outcome for most working-age employees: even with a meaningful medical aid premium, the 7.5%-of-taxable-income floor absorbs the excess before the 25% rate ever applies, so no Section 6B credit is generated. The credit becomes realistic mainly for taxpayers with very high out-of-pocket medical expenses on top of scheme contributions, or for those 65 and older, or with a qualifying disability, where a more generous formula with no income floor applies instead. Use our Medical Aid Tax Credit Calculator to calculate your full Section 6A and 6B position.
Frequently Asked Questions
What does code 4005 mean on my payslip?
Code 4005 is your personal employee medical aid contribution — the amount you pay toward your medical aid each month, deducted from your net pay after tax. It is not tax-deductible at source but contributes to the Section 6B excess medical expenses credit that may generate a refund when you file your annual tax return.
Is code 4005 tax-deductible?
Not directly. Code 4005 does not reduce your taxable income before PAYE is calculated. The tax benefit for medical aid contributions comes through the Section 6A monthly tax credit (code 4474), which reduces PAYE directly, and potentially through the Section 6B excess credit at year-end — but only if total contributions exceed four times the annual Section 6A credit by more than 7.5% of your taxable income, which for most working-age taxpayers without a disability means no Section 6B credit actually arises.
What is the difference between codes 3810, 4005 and 4474?
Code 3810 is your employer's medical aid contribution — a fringe benefit that increases your taxable income. Code 4005 is your own contribution — deducted from net pay, not tax-deductible, but feeds into Section 6B. Code 4474 is the SARS Section 6A tax credit — a fixed monthly amount that directly reduces your PAYE. Together they determine your complete medical aid tax position.
What is the Section 6B excess credit and how does 4005 feed into it?
Section 6B provides a 25% credit on medical aid contributions (plus other qualifying out-of-pocket medical expenses) that exceed four times your annual Section 6A credit, but only on the portion of that excess which also exceeds 7.5% of your taxable income — this 7.5% floor is the part most people overlook. Your code 4005 employee contribution is added to your code 3810 employer contribution to determine the total annual premium. For under-65 taxpayers without a qualifying disability, the 7.5% floor is often larger than the excess itself, meaning no Section 6B credit is actually payable — a different, more generous formula with no income floor applies if the taxpayer is 65 or older, or has a disability (their own, a spouse's, or a dependant's).
Does my code 4005 appear on my IRP5?
Yes. Your total employee medical aid contributions for the year appear as code 4005 on your IRP5. SARS uses this alongside code 3810 to calculate your total annual premium and assess your Section 6B credit eligibility. If code 4005 is missing or incorrect on your IRP5, contact your employer's payroll department and request a correction before filing.
If I pay the full medical aid premium myself, is it all code 4005?
Yes. If your employer makes no contribution to your medical aid, the full premium is coded 4005 and there is no code 3810 entry. You still receive Section 6A tax credits (code 4474) and may qualify for Section 6B excess credits at year-end. Self-employed individuals who are not on a company payroll handle medical aid contributions differently — consult a registered tax practitioner for your specific situation.