Are Bursaries Taxable in South Africa? The Section 10(1)(q) Exemption

A bona fide bursary or scholarship to study at a recognised institution can be exempt from tax under section 10(1)(q) of the Income Tax Act, but the exemption is not unlimited. A bursary paid to you, the employee, is exempt in full. A bursary your employer gives to a relative of yours, such as your child, is exempt only if your remuneration proxy for the year is R600,000 or less, and then only up to R20,000 for schooling (Grade R to 12, NQF levels 1 to 4) or R60,000 for higher education (NQF levels 5 to 10) per relative. Anything above those caps is taxed in your hands.

The point of the section is to let employers help staff and their families study without an immediate tax bill. The caps and the R600,000 income test are what stop it becoming an untaxed way to pay salary.

A bursary to the employee versus a bursary to a relative

The two are treated differently.

If the bursary is for the employee's own studies, it is exempt with no rand cap, provided it is a bona fide bursary. Where the employer requires you to repay it if you fail to complete the course for reasons other than death, ill health or injury, it still counts as a bona fide bursary while those conditions stand.

If the bursary is for a relative of the employee, two tests apply before any exemption:

• Your remuneration proxy for the tax year must not exceed R600,000. Remuneration proxy is broadly your remuneration for the year. If you earn more than R600,000, the bursary to your relative is taxable in full, with no exemption at all.
• The exemption is then capped per relative by the level of study.

The relative caps

Where your income is R600,000 or less, the exempt amount per relative is:

Level of study	Relative without a disability	Family member with a disability
Grade R to 12, or NQF level 1 to 4	R20,000	R30,000
Higher education, NQF level 5 to 10	R60,000	R90,000

Only the portion of the bursary above the cap is taxable. The R20,000 and R60,000 caps sit under section 10(1)(q); the higher R30,000 and R90,000 caps for a family member with a disability sit under section 10(1)(qA). The exempt slice reflects on your IRP5 under codes 3815 or 3821; the taxable slice under codes 3809 or 3820.

A worked example

Sipho earns a salary of R450,000 for the 2026 tax year, so his remuneration proxy is under R600,000 and the relative caps apply.

His employer pays a R25,000 bursary for his daughter, who is at university (higher education, NQF 5 to 10). The cap there is R60,000, and R25,000 is below it, so the whole R25,000 is exempt.

The employer also pays R25,000 for his son, who is in Grade 11 (Grade R to 12). The cap there is R20,000:

Exempt = R20,000 Taxable = R25,000 - R20,000 = R5,000

So R5,000 is added to Sipho's taxable income and taxed at his marginal rate. If he is in the 31% bracket for 2026, that is about R1,550 of tax on a R50,000 pair of bursaries.

Now change one fact. If Sipho earned R650,000 instead, his remuneration proxy would exceed R600,000, and both bursaries would be taxable in full: R50,000 added to his income, not R5,000.

The salary sacrifice trap

Since 1 March 2021, if a bursary or scholarship to a relative of the employee is funded through an element of salary sacrifice, the whole amount is taxable in the employee's hands. In other words, you cannot take a pay cut and have the employer route the money to your child's school fees tax free. The employer still claims its deduction, but the exemption falls away for you. This closed a structuring gap and is worth checking if your package offers a bursary in exchange for giving up cash salary.

You can see how the added amount changes your tax in the basic income tax calculator and how other study-related payments are treated in the guide on how your bonus is taxed. For a student earning their own income, the separate rules are covered in the article on a student's part-time job and tax.