Learnerships tax rebate

Introduction

The tax incentive was introduced in 2002. This was specific in section 12H of the taxation act. The purpose was then, and still is, to encourage companies to employ people, reduce the cost of hiring and the training of employees. The tax rebate makes program a good opportunity to upskill employees and at the same time save on tax, to reduce the overall training cost.

Overview

This tax rebate is in the form of an allowance which can be deducted from the employer’s income when the taxable income is calculated. This deduction is called a “learnership allowance”. This allowance can be deducted at the start of the program and a further allowance upon completion of the program.

This tax rebate can be deducted for employed staff and unemployed people. This will motivate companies to also train unemployed people and hopefully absorb them into the company on completion of the program.

If the agreement is terminated before completion, and no substituted learner is found, the tax rebate must be added back in that year. The program will not be deemed as started, if the agreement is not in place.

Agreement

This agreement is an agreement entered into by

  • The learner
  • The employer
  • The training provider

The agreement must be registered with a Sector Education and Training Authority (SETA).

Allowance specifications

The following requirements must be met before the allowance can be deducted:

  • An agreement must have been entered into or completed during the specific year.
    • Entered into means the learnership agreement is registered with SETA. The learnership is deemed as registered on the date entered between the parties. It must be registered at the SETA within 12 months from this date.
    • Completed means the SETA has confirmed completion.
  • This must be a registered agreement.
  • The employer must be the original employer in terms of the agreement.
    • The company can second an employee to work at another company, but the other company cannot claim the tax rebate. The original company can claim the tax rebate.
    • It is also the original company’s responsibility to ensure completion of the program as per the agreement.
  • An agreement cannot be replaced.
    •  A learner can do multiple learnerships and the company can claim the tax rebate on each of these. But the learner cannot replace one with another.
  • The agreement must have been entered into the course of trade.
  • The employer must have the following documentation available:
    • Standard form IT180 for each learnership
    • This form includes the following information:
      • Name of SETA where learnership is registered
      • Title and code of learnership
      • Full names and identification number of learner
      • Confirmation that the employer has compiled with all the requirements the skills development levies act
      • Upon completion of the program, confirmation from SETA of this completion.

Allowance amount

The amount of the tax rebate allowance is dependant on the following factors:

  • When the agreement was entered into
  • When the program was completed
  • If the person is disabled or not
Year of registration (able-bodied) Year of completion (able-bodied) Year of registration (disabled) Year of completion (disabled)
Learners holds a NQF  1 - 6 qualification  R    40,000.00  R    40,000.00  R    60,000.00  R   60,000.00
Learners holds a NQF >7 qualification  R    20,000.00  R    20,000.00  R    50,000.00  R   50,000.00

 

The maximum incentive amount is R20m per year.

When will the tax rebate not be allowed

  • The employer is changed during the program. None of the companies may claim the tax rebate on completion of the program.
  • A learnership is substituted with another learnership for the same employee.
  • The same program is registered with the same employee more than once.

Skills levies

An employer who is exempt from paying skills development levies can still deduct the skills levy.

learnerships

 

 

 

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