Paymaster Magazine

Bursaries and Scholarships

Any bursary or bona fide bursary or scholarship granted to enable or assist any person to study at a recognised educational or research institution may be exempt from tax

The bursary must be granted to the employee or one of his relatives (read children)

What is taxable

1)    If the bursary is granted to an employee where the employee does not agree to repay the money if the employee fails to complete the studies for reason other than death., ill health or injury

2)    If the employee  earns more than R 100.000 per year

3)    If the bursary exceeds R 10 000 for the tax year then the additional amount must be taxed.

Example

An employer granted a bursary of R14 000 to each of the employee’s two children. The

Employee earns an annual salary of R72 000, a bonus of R6 000 and a housing subsidy ofR8 000. The employer does not operate a bursary scheme that is open to the general public.  Although the employee’s remuneration does not exceed R100 000 per annum, the bursaries are paid in consequence of services rendered by him.The bursaries of R14 000 each exceed the exemption limit of R10 000 per relative, but only the Taxable portion of R8 000 (R28 000 less R20 000) is subject to the deduction of employees’ tax in the hands of the employee.If the employee’s remuneration, however, exceeds R100 000 per annum, the bursaries (R28 000) will be taxable in full.

4)    Low interest or no interest  bearing loans will be taxed as a fringe benefit,

5)    A  loan that is written off should the employee pass  will be seen a benefit and will then be  seen as taxable

What is not taxable

1)    A bursary of R 10 000 for your relatives if you earn less than R 100 000 p/a

2)    All expenditure related to internal on the job training

The following are examples of this type of training:

a)    Computer and word processing courses

b)     Management and administration courses

c)     Bookkeeping courses

d)     Sales courses

e)     Courses in operating office and technical equipment; and

f)      Language courses for employees.

1)    A loan that is repaid at the required interest rate with no reward for passing.

Adrian Baillie-Stewart

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