| 21/11/2008 |
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| Board of Special Commissioners - Cases |
| Case No. 16/59 |
Decided: 27 June, 1959 |
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Whether a training course overseas, a prerequisite to qualify for a promotion, is considered to be a scholarship; Income chargeable to tax where an employee receives an overseas allowance - articles 5 and 8, now 4 and 12, Income Tax Act
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A Government employee, required to attend a training course overseas with a view to qualifying for a promotion, had his salary temporarily suspended. In lieu of salary the employee received local commitments allowance and maintenance allowance apart from having his travelling expenses and tuition fees paid for by Government. The question arose as to whether such income was chargeable to tax.
Were one to classify such an arrangement as a scholarship then the income would have been exempt in toto in terms of the provisions of the law (note: before it was changed to its present version). A scholarship, however, implies an endowment given freely and unconditionally to a qualified person intending to further his education and not to satisfy a condition imposed upon him by his employer to qualify for a promotion. Whereas the scope of a scholarship is the promotion of education: attendance at the training course in question was a condition of employment.
Once appellant retained his employment, and his salary, as such, was only temporarily suspended and substituted by the allowances, it is reasonable to assume that the allowances were meant to cover the normal salary under a different title and the reimbursement of out-of-pocket expenses appellant incurred to meet his commitments overseas. A reimbursement of expenses cannot be considered as additional remuneration.
In the circumstances the Board decided that only an amount equivalent to the normal salary was chargeable to tax.
An appeal was entered before the Court from this decision (see case no. 32).
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