A lesser-known tax exemption given to individuals lives within the realm of education. This exemption includes bursaries and scholarships granted to an employee or a relative of the employee. A relative, in this regard, is a spouse or person related to the employee or their spouse within the third degree.
So, what are the requirements to qualify for a tax exemption?
The scholarship or bursary can only be granted for study at a recognised educational institution. If the employee is the beneficiary, they must agree to repay their employer the amount received for the bursary or scholarship if they fail to complete the studies for which the benefit was provided. There is no limit to the benefit being granted.
If a relative of the employee is the beneficiary, the employee cannot earn more than R600,000 per annum. The benefit is also limited to R20,000 for studies up to NQF 7, and R60,000 for studies from NQF 7 and above.
When the bursary or scholarship is granted to a disabled relative of the employee, the exemption limit is raised to R30,000 per relative for basic education and R90,000 per relative for higher education.
The purpose of the scholarship or bursary is to enable the beneficiary to expand their knowledge or skills and can cover the following costs:
- Tuition fees;
- Registration and examination fees;
- Books, equipment, accommodation, meals and meal vouchers;
- Transport from a residence to campus and back.
If you want to make use of this exemption, discuss your options with your company.
NQF is the National Qualifications Framework. NQF 1 to 7 is a general certificate up to a diploma and advanced certificate. NQF 7 and above is a bachelor’s degree and advanced diploma up to a doctorate degree.
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