siyaya's Knowledge base

Skills Development Ammendment Act
BBB-EE
Skills Development Levies Act
Employment Equity Act
Employee Tax Incentive
Section 12)a) of the Income Tax Act

Understanding legislation & Incentives

 

The Skills Development Levies Act    
The Skills Development Levies Act governs all employers in South Africa whose annual salary and wage bill exceed R 500,000 annually (employers except the public sector, religious or charity organizations and public entities that get more than 80% of their money from Parliament).  Employers who fall within the ambits of the Skills Development Levies Act pay 1% levy of their total salary and wage bill, payable to SARS, for the training and development of people. More than half of the contribution is available for the reimbursement of training expenses incurred by that employer in the form of Mandatory, Pivotal and Discretionary Grant funding, provided they are complaint with the requirements as detailed by Seta.

Where does the money go?
SARS collects all SDL’s. 20% goes to the National Skills Fund and 80% to the SETA’s.  SETA’s retain 10.5% for their own administration, 0.5% the Quality Council for Trades and Occupation (QCTO) for quality assurance, 20% is dispersed back to compliant and participating employers (Mandatory Grant) and allocate 49% to their Pivotal pool of funds. 80% of this Pivotal pool of funds is available to employers in the form of a Pivotal Grant (subject to application and success submission of a Pivotal Grant Plan) and 20% is reserved for Discretional funding of compliant employers (subject to application/allocation). Non-compliant or non-participating employers Mandatory Grant is swept into the discretionary pool. SETA’s may also apply for additional funding from the National Skills Fund for special projects. Should the SETA not use the funds at their disposal they are swept back to the National Skills Fund (NSF).

What are the benefits of participating?
Employers can benefit from financial incentives (Section 12H (a) a SARS incentive) and participants may access funding from respective SETA’s. Organizations will also optimize their B-BBEE compliance by aligning training objectives and will address skills shortages through participation.

The primary responsibility of Siyaya’s SDF facilitators is to ensure that clients record training expenses (both internal and external) correctly and submit the necessary documentation in order to be reimbursed their Mandatory and Pivotal Grant by their SETA.

Siyaya services offers clients an obligation free turnkey solution whereby we manage the entire process at a rate which is linked to the gross Salary and Wage bill of the business concerned while ensuring the consideration of supporting legislation.

Section 19A of the Income Tax Act (The Employee Tax Incentive/Youth Employment subsidy)

The purpose of the Employment Tax Incentive is to encourage employers to hire young people by reducing the amount of PAYE payable to SARS, thereby reducing the cost of employment to the employer, while leaving the employee’s earnings unaffected.

The Act encourages private employers to employ young workers between the ages of 18-29 by providing a tax incentive to employers, with government sharing the costs of such employment for a maximum of two years under certain conditions. This program can also be used to cross fund learnership interventions for unemployed learners (18.2 learners) on proviso that the participants meet the requirement of the incentive.

How does it work?
Employer will calculate and claim the incentive on a monthly basis. The employer must follow these steps:

  • Identify all qualifying employees in respect of that month
  • Determine the applicable employment period for each qualifying employee
  • Determine each employee’s “monthly remuneration”
  • The EMP201 form was amended to include a field for claiming ETI

Calculate the amount of the incentive per qualifying employee as per the table below:

tax incentive

The ETI, if correctly administered, can offset the cost of legislative conformity. Siyaya assists with the administration, claim and integration of the ETI as part of the holistic approach to compliance ensuring compliance at the lowest average cost.

 

Where does the money go?

SARS collects all SDLs of which 20% goes to the National Skills Fund and 80% to the SETAs. SETAs retain 10.5% for their own administration, 0.5% the Quality Council for Trades and Occupation (QCTO) for quality assurance, 20% is dispersed back to compliant and participating employers (Mandatory Grant) and allocate 49% to their Pivotal pool of funds. 80% of this Pivotal pool of funds is available to employers in the form of a Pivotal Grant (subject to application and success submission of a Pivotal Grant Plan) and 20% is reserved for Discretional funding of compliant employers (subject to application/allocation). Non-compliant or non-participating employers’ Mandatory Grant is swept into the discretionary pool. SETAs may also apply for additional funding from the National Skills Fund for special projects. Should the SETA not use the funds at their disposal they are swept back to the National Skills Fund (NSF).

What is a Mandatory Grant and how do I access it?
The Mandatory Grant facilitates a reimbursement of training expenses incurred (both internal and external) by a compliant employer of up to 20% of their Skills Development Levy contribution, subject to:

  • The employer being up to date with the payments of Skills Development Levies due
  • The compliant compilation and submission by the 30th of April of a Workplace Skills Plan (a plan of the training to be carried out within the next reporting period April to March)
  • An Annual Training Report (a report of the training undertaken in the previous reporting period explaining any variances)
  • For employers:
    • Of more than 50 people, they are in addition required to create a representative Skills Development Committee whose collaboration on identifying skills requirements are evidenced through the provision of minutes
    • Of less than 50 people there is no requirement for a Committee and there is a simplified WSP & ATR submission required
  • The historical achievement of the previous Workplace Skills Plan (as from the 1st of April 2013) to an extent that satisfies the criteria for implementation outlined by the SETA
  • Unionized workplaces consulting and approving WSP & ATR submissions including its sign-off by an appropriately empowered employee representative

Companies who don’t participate forfeit their Mandatory Grant each year. Their unclaimed money, plus the SETA’s discretionary allocation and any special funding received by the SETA from the National Skills Fund (NSF), provides funding to participating employers in excess of what is available as their Mandatory Grant (20% of their 1% Skills Development Levy) and Pivotal Grant (up to 49% of their 1% Skill Development Levy). This funding is applied for, and allocated by the employers SETA, at their sole discretion.

What are the benefits of participating?
Employers can benefit from financial incentives (Section 12H(a) a SARS incentive) and participants may access funding from respective SETAs. Organizations will also optimize their B-BBEE compliance by aligning training objectives and will address skills shortages through participation.