Scholarships/Bursaries – how this can reduce your tax bill

Bursaries to Employee relatives

An income tax exemption exists for ‘Bona Fide’ bursaries or scholarships granted by an employer to an employee (or relatives of its employees). The employee will not be taxed on these amounts in their personal capacity if specific rules are complied with – ie mandatory repayment if an employee fails to complete their studies for reasons other than death, ill-health or injury.

For relatives of employees there are further rules applicable:

– the employee’s annual salary limit may not exceed R250 000 in any tax year

– The monetary limit for bursaries/scholarships for studies up to and including
NQF4/ Matric/Grade 12 is R10 000 per year

– The monetary limit for bursaries/scholarships for further studies after
NQF4/Grade 12 is R30 000 per year

This is effective from 01 March 2014 onwards.

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