A glimmer in this year’s Budget Speech
Not all darkness and gloom.
While the 2017 Budget Speech left much to be desired, there was a glimmer among the gloom – particularly for employers and employees.
The Taxation Laws Amendment Act, 2016, which was promulgated in January 2017, allows for an increase in tax-exempted amounts for bursaries provided to employees’ relatives.
Basically, what this means, and as indicated in this year’s Budget Speech, the employer bursary scheme allows employers to essentially grant tax-free bursaries or scholarships to dependents of its employees – provided that the employee’s remuneration does not exceed R600 000 (a massive jump from the previous R400 000 limit).
Says chartered accounting and tax advisory firm Octagon Chartered Accountants: “What makes this scheme a wonderful initiative is that these scholarships or grants will be exempt from tax in the employees’ hands, provided that it does not exceed R20 000 per each dependent per year [up from the previous R15 000 limit], for education below NQF7, and similarly, R60 000 for education at NQF7 and above [up from the previous R40 000 limit].
“What employees and employers need to keep in mind is that the full bursary will be deemed taxable, should the employee earn more than R600 000 a year. However, it does provide opportunity for salary structuring of mid to lower level employees’ pay packages. ”
Aside from the increase in bursaries and scholarships, travel allowance tables have also been adjusted upwards, and the medical tax credit has seen an increase.