Q: A company is prepared to pay the tuition fees of an employee to
complete the national qualifications required to become compliant as required
by the Financial Services board. Can the fees be deducted as an expense, or is
it regarded as capital nature?
A: We accept that the employer is "prepared to pay the
tuition fees of an employee” because the employee’s work done for the employer
requires this. Such a benefit may be exempt from normal tax – see section
10(1)(q) of the Income Tax Act.
As far as the
deduction concerned (for the employer) the employer should be able to meet the
burden of proof that it is not capital in nature – see the BP (SA) case.
If the purpose of the expense is in the production of income, in other words it
qualifies under section 11(a), the deduction can be made.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.
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