Employee education is very near to employers' hearts. After all, the more qualified your employees are, the better it is for your business.
Now, thanks to a SARS'
Interpretation Note released on 1 March 2012, you can help further your employee's education without having to pay tax on the bursary.
Here's what you need to do for your staff bursary to get SARS' nod
For your staff bursary
'to qualify for the tax exemption
, you must pay the institution directly. If your employee pays the fees himself and then claims back from you, you won't get an exemption from tax
. You won't be able to get an exemption for study loans either,' explains the Tax Bulletin's
Even better, your employee doesn't have to get a degree or diploma at the end of his studies to qualify for tax exemption
. Any course (including in-house staff training
You can ensure your staff bursary stays out of SARS' tax net by following these four requirements:
The Tax Bulletin
outlines the following requirements to ensure your staff bursary
#1. Ask your employee to sign an agreement stating that he'll reimburse you for the bursary
if he fails to complete his studies for any reason other than death, ill health or serious injury.
#2: If the bursary
is for an employee's relative, it's tax free up to a maximum of R10,000 per year, per relative. (This tax-free portion only applies if the employee earns less than R100,000 per year.)
#3: If you award a staff bursary
and your employee retires a few months later, the conditions around the R100,000 remuneration limit (described above) apply.
#4. If you hire a new employee who has a bursary from his previous employer, take a close look at his contract with that employer. If it states that he has to pay the company back for the bursary
on resignation, you can choose to make the payment on his behalf. This repayment is tax free if you sign an agreement with the employee saying he'll work for you for a specified period of time.
Remember to include staff bursaries on your employee's IRP5!
Don't forget: If you give an employee a taxable bursary
, the amount must be reflected on his IRP5 for tax purposes.
has never made so much sense – not only will boosting your employee's education profit your business in the long run, but you'll also be able to do so tax-free.
If you need more information on IRP5, IRP5(a) and IT3(a)
get the Practical Tax Loose Leaf
. In the Practical Tax Loose Leaf
we've got a dedicated chapter on IRP5, IRP5(a) and IT3(a),
in it you'll discover:
You must meet these timelines!
Three types of employee tax certificates and when to use them
5 situations when you must issue an employees' tax certificate
Make sure you include this mandatory info so SARS doesn't reject your tax certificate
You must submit your tax certificate electronically – here's how
Now you can submit your certificates the easy way
Get your Practical Tax Loose Leaf here...