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With the ever-increasing cost of living, annual remuneration increases may not always be sufficient to increase employees’ buying power. One other mechanism that employers can use to assist their employees, is by granting employees bursaries or scholarships for educational expenditure. If an employer grants a bursary or scholarship to a qualifying employee or a relative of such employee, the bursary or scholarship may possibly be exempt from normal income tax in terms of sections 10(1)(q) and 10(1)(qA) of the Income Tax Act.

Power of the Court in tax disputes

A recent Supreme Court of Appeal case highlighted that understatement penalties not only place significant pressure on a taxpayer’s financial resources, but could also be indicative of a lack of commitment to proper corporate tax compliance and risk management. Where a taxpayer disagrees with the understatement penalty imposed, the onus is on the taxpayer to submit proof of why the relevant understatement penalty or the penalty percentage is inappropriate in the circumstances.