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Confused about IRP5 source codes? This checklist will make things simpler

by , 07 July 2014
If your company contributes to medical aid schemes on behalf of your employees, you must ensure you allocate the contributions correctly. If you get it wrong, you'll face penalties!

But where do you start.

Your starting point is to make sure you use the correct IRP5 codes.

You see, SARS has systems in place that screen your IRP5s (Employee Tax Certificates).This is to make sure there's no funny business!

Continue reading to discover a checklist that will help ensure the source codes you use on your employees' tax certificates are correct.

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Use this checklist to ensure you use the correct IRP5 source codes
 

Experts at the Practical Tax Loose Leaf Service say there are two different parts to IRP5 source codes.

The first deals with medical expenses and the second deals with medical aid contributions and the medical tax credit. Let's take a look…

Five medical expense source codes you must be aware of

#1: Source code: 3813
Description: This is for medical expenses you pay as an employer. The value of code 3813 must be equal to the sum total of the values of codes 4024 and 4485.

#2: Source code: 4024
Description: This is for medical expenses deemed to be paid by your employee.

#3: Source code: 4020
Description: This code is for medical expenses deemed to be paid by your employee for himself, his spouse and children.

#4: Source code: 4485
Description: This source code is for medical expenses you paid as an employer for other relatives or dependants (not the spouse and children) of your employee.

#5: Source code: 4487
Description: This is for medical expenses paid by the employer if the no value provision applies.

Now let's take a look at five medical aid contributions source codes.

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Five medical aid contributions source codes you need to know

#1: Source code: 3810
Description: This is for medical aid contributions paid by you as an employer.

#2: Source code: 4005
Description: This is for medical aid contributions paid and deemed to be paid by your employee.
Note: Code 4005 is mandatory if a value for code 3810 is specified.

#3: Source code: 4474
Description: This is for the employer's full medical contributions.

#4: Source code: 4493
Description: This code is for medical aid contributions paid by you as an employer for a retired employee or his/her dependents if the no value provision applies.

#5: Source code: 4116
Description: This is for the medical scheme fees tax credit you'll take into account for PAYE purposes.

Now that we've given you a comprehensive checklist, make sure the IRP5 source codes you use on your employees' tax certificates are correct so you can avoid penalties.



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Comments
1 comments


Amily 2014-07-10 10:56:04

please can you advise what should i do when the employer has not filed the IRP5 nor can give me a copy of the certificate. The company has since closed down, how do i file my return without this document paye and uif was deducted monthly and not paid over to SARS

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