Employee Children Bursaries – Tax Saving Structuring
The ability for employees and business owners to pre-tax structure their children’s school and university fees, remain one of the few available, but seldom used tax planning opportunities. This is the only tax break allowed on private expenses and have been extended in the 2017/18 Budget Speech.
The saving depends on the cost of school fees, tax brackets and number of children. For qualifying employees, the saving ranges between R3,600 to R23,400 per child per annum.
The most common reasons why employers, business owners and their advisors have been reluctant to offer this to employees include –
- Technical uncertainty on how the tax relief must be package structured correctly and concerns that a tax scheme may be operated which may later be challenged by SARS audit.
- Resources to implement, roll out and administer the scheme.
- Capacity to deal with employee questions, tax risk management, proper communication on the saving to employees.
- The cost of top end tax advisors to see through implementation and administration.
We offer an outsourced employee children bursary scheme, with no cost to the employer. The cost of this service is an administration fee, funded from the tax saving –
a) Assessment on whether employees qualify, and the tax saving achieved.
b) Salary structuring agreement.
c) Instruction for payroll.
d) One invoice per month for all participating employees with reconciliation.
e) Tax policy documentation, tax opinion and other supporting documentation to ensure full tax legal compliance and tax risk management.
Our service includes our defence against any SARS employees’ tax audit or employee personal tax audit, at no cost to the employer, including any costs of defence at the Tax Board or Tax Court.