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From virtually the outset Biznews has enjoyed a close relationship with Rhodes University tax professor Matthew Lester. And this most entertaining of chartered accountants must be credited with passing on a rare bit of good news.
Finance Minister Pravin Gordhan has opened up a very useful tax planning tool for members of South Africa’s “missing middle” – those earning up to R600 000 a year. Provided their employers play along, they can now receive part of their income as a tax-free bursary for the education costs of their relatives.
Matthew explained at a BDO-sponsored post-Budget presentation that hidden in the Budget’s small print is a facility for businesses to give bursaries of up to R60 000 for university students and R20 000 for school. Even if the staff member were to negotiate this as a salary sacrifice, the saving is significant – fees being paid from pre- rather than post-tax income.
But the first prize would be when companies embrace the concept by introducing a comprehensive bursary scheme as part of their contribution to the education crisis. And it’s tax efficient – and just the ticket to enhance staff engagement. The 2017 Budget wasn’t all bad after all.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.