The taxman has historically had a bad name. In fact, tax collectors were considered the scum and the “lowest of the low”.
Based on that premise, in South Africa, the South African revenue service (SARS), had inherited that name. You mention the word ‘tax’ and a flurry of complaints and horror stories will arrive. The minority of these will be positive. Even then, people will probably not believe them.
With this in mind, I would like to enlighten you and your business about an initiative from SARS. They are enabling businesses to give a bursary to any of their employees and their families. This is directed to do two things:
- Empower people by educating them
- Give you a tax break while doing it.
SARS tax bursaries
The initiative allows businesses to grant employees and their relatives a bursary aimed at “helping the individual gain knowledge”. These benefit both the business and the individual.
Business: the business can give employees a bursary to study without spending extra money on top of the usual salary. The traditional bursary can be a financial burden on companies and are no longer as popular as they once were.
Companies are always looking for the best talent to employ but don’t really want to pay the exorbitant salaries. They also want employees to stay in the company and, more importantly, to be happy in that company.
The bursary will have two positive impacts here:
- Keeping the employees up to date, thus keeping the intellectual brainpower in the company. This will alleviate the search for employees.
- The employee will be empowered because the company values him/her as an employee enough to send on the training. His knowledge grows and the confidence grows too. This increases the desire to do bigger and better things. It will stop the employees from looking elsewhere for employment.
Employee: They get to pay less tax and increase their knowledge at the same time!
Terms of the bursary
There are always terms and conditions! There are limitations to this bursary which is understandable. These are:
- The employee must be in full-time employment
- The employee must earn R600 000 per annum
- The bursary can only be given to the employee or their relatives up to 3 generational points
- The aim of the education must be for “the gain of knowledge”. It cannot be a reimbursement for prior learning
- The education must be obtained from a registered learning institution with the department of education
How much is the bursary?
There are 2 levels. These are based on the NQF levels in South Africa. The bursary limits are:
- Up to NQF 4, R 20 000 per annum and,
- NQF 5 to 10, R 40 000 per annum.
Again, there are conditions here too. They can cover the following but not limited to, just these:
- Cost of education itself e.g. school fees
- Accommodation on a university campus
- If the accommodation is off-campus, transport to and from campus
- Books and stationery
- Uniforms in the case of schooling. This does not include sports kit
The income tax act references are:
- Section 10(1)(q)(ii) (aa and (bb)
- Paragraphs 1 and 2(h) of the Seventh Schedule
If you do not want to read these sections of the Act, feel free to contact us and we will explain things further.