Hi,

So we want to structure the qualifying employees' salaries from Oct 2019 to benefit from the Section 10(1)(q) of the Income Tax Act exemption for scholarship / bursaries to employees and family of employees.

Pastel Payroll does not want to assist with the technical application of this rule, so please help :-)

Say an employee has 3 children at school, ie. the employee qualifies for R20,000 x 3 exemption per year. So we are unsure of the following:

1) Does this R20,000 per child exemption have to be spread over 12 months (R1,667 x 3 per month) or can you put the full R20,000 x 3 down in one month? So if you only start using this exemption now in Oct 2019, do you have to spread the R20,000 x3 over the remaining 5 months (R12k per month) or do you lose the portion of the exemption for the 7/12 that you did not apply this exemption?

2) Do you then reduce the basic salary with the amount shown under scholarship / bursaries or leave basic the same and only put scholarship/bursary under the seperate code? Ie. Say the basic was R20,000 before applying this exemption, will the basic now reduce to R15,000 and then under the code for scholarship R1,667 x 3 (R15k)?

Thank you in advance.