Bursaries have recently come under the spotlight so here are a few pointers to take note of.
A bursary (given to an employee or a relative of the employee) is not taxable in the hands of an employee if:
- The employee earns less than R 100 000 p/a
- The amount of the bursary is greater than R 10 000 (however, the excess above the allowable R 10 000 is taxable)
- It’s an open bursary, i.e. open to anyone
- It’s a closed bursary and is granted to an employee where the employee agrees to pay back the bursary amount if the employee does not complete the required studies for reasons of death, illness or injury
The exempt portion of the bursary must be recorded in Code 3815 on the tax certificate, whilst the taxable portion must be recorded in Code 3809.
A recent query regarding this:
If the employee’s normal earnings is less that R 100 000 p/a and
- The Employee gets an increase after the granting of the bursary which pushes him/her over the R 100 000 p/a ceiling or
- The Employee gets a bonus, incentive bonus or any other “once off” type payment in the year which pushes him/her over the R 100 000 p/a ceiling…
…Does the Employee now have to be taxed on the bursary value previously granted?
Answer:
Generally no. Where the additional amount paid to the employee is not going to be considered as normal/regular earnings.
Generally yes. If the amount paid becomes a regular payment (i.e. an increase in the employee’s package which pushes his normal earnings over the R 100 000 p/a.
In any event SARS will check this again at assessment time.