Page 575 - SAIT Compendium 2016 Volume2

IN 65 (2) Income Tax acT: InTeRPReTaTIon noTes IN 66
for a tax deduction or allowance if the requirements of the relevant deduction or allowance provision are met. Section 22(8) does not apply to –
• livestock or produce; or
• any assets the receipts or accruals from the disposal of which are included in gross income under paragraph (jA) of the
de nition of the term ‘gross income’.
Interpretation Note 66 Scholarships or bursaries
DATE: ACT: SECTION: SUBJECT:
Preamble
1 March 2012
INCOME TAX ACT 58 OF 1962 (the Act)
Section 10 (1) (q) and the Seventh Schedule to the Act Scholarships or bursaries
• • •
In this Note—
references to sections are to sections of the Act;
references to paragraphs are to paragraphs of the Seventh Schedule to the Act unless otherwise stated; and unless the context indicates otherwise, any word or expression bears the meaning ascribed to it in the Act.
1. Purpose
This Note provides clarity on the tax implications of any bona de scholarship or bursary granted to enable or assist any person to study at a recognised educational or research institution. Practice Note 17 of 12 March 1993 is hereby withdrawn.
2. Background
Generally, any bona de scholarship or bursary granted to enable or assist any person to study at a recognised educational or research institution is exempt from normal tax. This exemption is, however, subject to certain conditions, particularly where the scholarship or bursary is granted by an employer (or an associated institution in relation to that employer) to an employee or to a relative of such employee.
3. The law
For ease of reference, the relevant sections of the Act are quoted in Annexure A, and are discussed in more detail below.
4. Interpretation of words and phrases
4.1 ‘Bona de scholarship or bursary granted’
The phrase ‘bona de scholarship or bursary granted’ refers to nancial or similar assistance granted to enable
a person to study at a recognised educational or research institution. Such nancial aid may be awarded with or without taking into account academic merit, and would include a grant which is, in terms of a written agreement, conditional upon the ful lment of certain stipulated requirements. The grantee may, for example, be required to obtain a quali cation within a certain period, or take up employment with the grantor on completion of the course of study.
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.
A reward or reimbursement of study expenses, borne by a person, after completion of studies, does not qualify for the exemption, as the grant must have been made solely to enable or assist the grantee to study. The tax position relative to scholarships, bursaries and study loans is dealt with in 5 of this Note.
A bona de scholarship or bursary could include the cost of the following:
• Tuition fees
• Registration fees
• Examination fees
• Books
• Equipment (required in that particular eld of study, for example, nancial or scienti c calculators)
• Accommodation (other than the person’s home)
• Meals or meal voucher/card
• Transport (from residence to campus and vice versa).
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 de scholarship or bursary.
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