Any bona fide bursary or scholarship granted to enable or assist any person to study at a recognised educational or research institution may be exempt from income tax, provided that it meets the criteria as set out by SARS. More information can be found in SARS’ Guide for Employers iro Employees Tax here and SARS’ Interpretation Note 66 here. If it does not meet the criteria set by SARS, it is considered a taxable fringe benefit.
NOTE: The remuneration threshold stated in Note 66 is no longer accurate. In May 2021 the remuneration threshold currently stands at R600 000.
SimplePay has a built-in system item to accommodate for the special tax and reporting requirements of a bursary or scholarship. To add this:
- Go to Employees on the left-hand menu and select the relevant employee.
- Click Add next to Payslip Inputs.
- Select Bursaries And Scholarships under Benefits.
- Enter the Taxable Portion and/or Exempt Portion of the bursary or scholarship.
- Select the type of study that the bursary or scholarship is for, i.e. School or Higher Education.
- Click Save.
If you would like to pay bursaries or scholarships by instalments rather than as a lump sum, you can do this by adding the relevant portion to each payslip, as detailed above.