Required assistance around IN66 (scholarships or bursaries) of the ITA: Is it a requirement that the scholarship includes paying school fees before the additional costs listed per the interpretation note are included as a "bona fide scholarship" and thus
Important:
This answer is based on tax law for the tax year ending 28 February 2019.
Answer:
The words used in section 10(1)(q) and (qA) are: “… any bona fide scholarship or bursary …”
The practice generally prevailing, dated 1 March 2012, explains that the “phrase “bona fide scholarship or bursary granted” refers to financial or similar assistance granted to enable a person to study at a recognised educational or research institution.” It also states that the “grant must be made to enable the grantee to pursue a course of study for the purpose of gaining or expanding knowledge, aptitude or skills.”
According to the Oxford dictionary,
A bursary, when used as a noun in English, means “grant, especially one awarded to someone to enable them to study at university or college” and;
A scholarship, a grant or payment made to support a student's education, awarded on the basis of academic or other achievement.
In terms of section 10(1)(q) or (qA), it must then be “granted to enable or assist any person to study”. The grant, according to the practice generally prevailing, “must be made to enable the grantee to pursue a course of study for the purpose of gaining or expanding knowledge, aptitude or skills.”
It then states that a “bona fide scholarship or bursary could include the cost of the following:
-
Tuition fees
-
Registration fees
-
Examination fees
-
Books
-
Equipment (required in that particular field of study, for example, financial or scientific calculators)
-
Accommodation (other than the person’s home)
-
Meals or meal voucher/card
-
Transport (from residence to campus and vice versa).”
In my view this still envisages an amount paid to the person to pay for these items. Relevant to that is the following statement:
“A direct payment of fees, for example, to a university for the purpose of an employee’s studies, is regarded as falling within the ambit of a bona fide scholarship or bursary.”
One would imagine that a direct payment for books or equipment, would on the same basis, also qualify.
We agree that a bursary or scholarship is not “limited to only include school fees”. We don’t agree that “as long as the costs relate to enabling the person to study at a recognised educational institution, it should classify as a bona fide scholarship”. If they relate to items not listed above, we submit that there must be a more direct link. We therefore agree that clothing would not be included. We don’t have a definitive view on, where it is a requirement of the school to wear a school uniform, that the cost doesn’t qualify. One would, if the view is taken that an amount paid to enable the person to buy a school uniform does qualify as a bona fide bursary or scholarship, have to support that with an opinion or get a ruling from SARS.