What are the tax consequences of a Bursary provided to an employee?
Important:
This answer is based on tax law for the tax year ending 28 February 2018.
Answer:
We accept that the request relates to the 2017 year of assessment.
The current remuneration of the employee is not relevant. It is the remuneration proxy that is relevant – see section 10(1)(q). From the information provided it is likely that she falls below the R400 000 for the 2016 year of assessment.
You are then correct that the exemption, for grade R to twelve, has a R15 000 limit. The current practice generally prevailing is that it is the “first R10 000 (which subsequently increased to R15 000) of a scholarship or bursary awarded during the year of assessment, where the remuneration derived by the employee during the year of assessment does not exceed R100 000 (R400 000 now),” that is exempt from normal tax in the hands of the employee. This accords with the wording in section 10(1)(q)(ii) – the exemption ‘… shall not apply … to so much of any … bursary … as … exceeds …”