It is dependent upon whether or not the scholarship is awarded by an employer or not.
22 Nov 2022 00:31
I’m a South African learning in Belgium and am on a full scholarship, which pays me about €3 000 [around R53 245] per 30 days, which isn’t taxed in Belgium (tax-free).
The cash I obtain from my scholarship is to cowl my dwelling bills in Belgium. Nevertheless, a portion is transferred to my South African checking account in order that I can assist my household and honour my SA debt obligations. I used to be employed full-time in SA earlier than receiving the Belgian scholarship.
As I’m nonetheless a SA tax resident, will the South African Income Service (Sars) in some unspecified time in the future need me to pay tax on the cash I obtain from my scholarship? I do plan to return to SA after I full my research, so there could be no must stop my SA residency, I believe.
Thanks on your query, which is at the moment pertinent as learning overseas is changing into extra frequent and extra accessible.
Earlier than discussing whether or not the funds acquired from a scholarship or bursary are taxable, it is very important perceive Sars’s definition of revenue, and the way it pertains to your explicit case.
In line with Sars, revenue consists of remuneration earned by an individual (both a person or authorized entity) for items and/or companies offered, or revenue acquired from numerous sources of annuities in respect of those that are in retirement. As soon as these funds are acquired, they’re seen as taxable revenue and a portion of this revenue can be taxed in keeping with the revenue tax sliding scale.
Nevertheless, there are a selection of tax exemptions which might be accessible to taxpayers comparable to Part 10 (1) (q) of the Revenue Tax Act, which straight pertains to bursaries and scholarships.
In line with the act, a bona fide bursary or scholarship that’s awarded to an individual to facilitate their research at a longtime training establishment, college or analysis facility is tax-exempt.
That stated, if a bursary or scholarship is awarded by an employer or any linked affiliation in relation to an worker or an worker’s relative, these funds could also be topic to tax if:
- The worker fails to finish their research and/or analysis and no association has been made to refund the employer; or
- The bursary or scholarship awarded to an worker’s relative exceeds R600 000 per yr. On this regard, no tax can be paid the place the bursary or scholarship is restricted to R20 000 per 30 days from Grades R to 12 (NQF ranges 1 to 4) or R60 000 per yr for NGF ranges 5 to 10.
So, though by way of the Revenue Tax Act your worldwide revenue should be included for the needs of tax, in case your bursary or scholarship complies with the phrases of Part 10(1)(q) as set out above, it will likely be exempted for tax functions. We advocate that you just converse to an expert tax advisor or an accountant to supply the recommendation you search.
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