A taxpayer paid bursaries on a monthly basis for an employee's children's school fees during the 2021 tax year, being March 2020 up to December 2020. The taxpayer seeks to pay the school fees upfront in January 2021 for the January - December 2021 school
Author: The Payroll Authors Group of South Africa
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
The Income Tax is clear on which tax year will apply, namely: remuneration “paid or payable” ….. The accrual date depends on the action that happens first, either if it is paid or if it becomes payable. Due to the fact that the employer will pay the fees in the current tax year for periods in the next tax, the “paid” has happen first and the accrual date will be the tax year during which it is paid. Therefore the exemption will apply for that relevant tax year.