Recent changes in South African taxation laws requires all businesses who are registered with SARS for employees’ tax purposes to also be registered with SARS for skills development, irrespective of whether they are excluded from paying the levy. Further changes in the BEE codes stipulates that all companies must comply to all elements of the BEE scorecard with skills development one of the three priority elements. A lot of focus is therefore placed on skills development for businesses across all industries.
Government has however put in place Employment Tax Incentives (ETI) for those businesses that comply to the Skills Development Act. One such incentive is for learnerships, which is classified as Category C or D training on the Learner Programme Matrix (LPM).
South African taxation laws makes provision for a deduction to an employer in addition to any other deductions allowable for any registered learnership agreement. Two types of deductions are allowable: an annual allowance, to which the employer is entitled in any year of assessment in which a learner is a party to a registered learnership agreement; and a completion allowance during any year of assessment in which the learner successfully completes the learnership.
A “registered learnership agreement” comprises an agreement registered in accordance with the Skills Development Act and entered into between the learner and the employer before 1 October 2016. In order to encourage employers to develop the skills of persons with a disability, the annual and completion allowances are increased by R20 000 for a learner who has a “disability”. The allowances are R30 000 or R50 000 if the learner is a person with a disability.
It is therefore possible to comply to the priority BEE scorecard element of skills development and qualify for a tax rebate if your business implements Category C or D training. In addition, if you contract an accredited private service provider rather than doing in-house training, your business can claim the full cost of the service provider as part of your training spend versus only 15% of the spend for in-house training.
At Triple E Training we make it easy for you to not only comply with the skills development element of the BEE scorecard but also to benefit from the tax incentive. Our SETA accredited NQF 1 learnership qualification meets all the requirements of Category C and D training on the LPM as well as the requirements to benefit from the maximum possible tax deduction. We do all the work and paperwork for you by recruiting an unemployed, disabled community member for the NQF 1 learnership programme. By absorbing the learner into your company at the end of the learnership you are able to score the maximum possible points on the BEE scorecard in addition to qualifying for a SARS tax deduction.
To find out more about our win-win solution to skills development compliance and tax rebate, call us at 011 668 4300.