In the 2016 Budget Speech Minister Gordhan announced an encouraging proposal with regard to the fringe benefit exemption for bursaries granted by an employer to the relative of an employee. 

Currently the law allows for an exemption from income tax of the following amounts granted as a bursary to a relative of an employee:

• R 10 000 in respect of a NQF 1 to NQF 4 qualification (effectively Grade 9 to Grade 12); and
• R 30 000 in respect of a NQF 5 to NQF 10 qualification (undergraduate qualification up to doctorate).

This exemption is allowed provided that the remuneration of the employee during the year of assessment does not exceed R 250,000. The exemption was recently amended further to include Grade R to Grade 8 in the R 10,000 exemption (backdated to 1 March 2013).

In the 2016 Budget, it has been proposed that the income eligibility in respect of the exemption be increased to R 400 000. It is also proposed that the exemption amounts be increased from R 10 000 to R 15 000 and from R 30,000 to R 40 000.

Considering the fact that a significant number of employees will fall within the increased remuneration limit, the proposed amendment opens the door for salary structuring and tax saving in the future. There was no indication as to when the proposed amendments will come into effect; however, it is anticipated that this will be included in the Draft Taxation Laws Amendment Bill which will be released for public comment later in the year.

Government has clearly indicated its commitment to skills development in the future and maybe (just maybe) it is listening to the #FeesMustFall movement.