Any bursary or scholarship granted to assist an employee (or their family member) 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 their children.
What is taxable
- 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
- If the employee earns more than R 600 000 per year
- Low interest or no interest-bearing loans will be taxed as a fringe benefit
- A loan that is written off should the employee pass will be seen as a benefit and will then be seen as taxable
What is not taxable
- A bursary of R 20 000 for your relatives – if you earn less than R 600 000 p/a…for Grade 1 -12, or qualifications from NGF level 1-4. For qualifications from NQF levels 5-10, R60 000 is allocated.
- All expenditure related to internal on-the-job training, such as:
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.
3. A loan that is repaid at the required interest rate with no reward for passing.
Consider offering your deserving employees (or their families) access to education through bursaries. HRmaster recommends you consult a tax expert to understand all the implications, as this is just an introduction to guide you as you contemplate this option.
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