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Employee’s Debt Benefit

SimplePay has a built-in system item to accommodate for the special tax and reporting requirements of an employee’s debt benefit. This fringe benefit arises if you, as the employer:

  • have paid an amount owing by an employee to a third party, whether directly or indirectly, without requiring the employee to make any payment for the amount paid; or
  • have released the employee from an obligation to pay an amount owing by them (the employee) to you (the employer).

This excludes medical contributions or medical costs incurred by you, the employer.

No taxable fringe benefit will arise for:

  • membership fees paid to a professional body, if this membership is a requirement of employment;
  • insurance premiums indemnifying an employee solely against claims arising from negligent acts or omissions on part of the employee in rendering services to the employer;
  • any portion of the value of a benefit which is payable by a former member of non-statutory force or service as defined in the Government Employees Pension Law, 1996 to the Government Employees’ Pension Fund.

To add this system item on SimplePay:

  • Go to Employees and select the relevant employee.
  • Click on Add next to Payslip Inputs.
  • Select Employee’s Debt Benefit under Benefit.
  • Enter the amount of the debt that you paid to the third party, or the amount of the debt that you have relieved the employee from.
  • Click Save.

This item will be reported under code 3808 on the employee’s IRP5 / IT3(a).