Section 12 (h) of the Income Tax Act contains well-known provisions which affords tax breaks for businesses that enter into and facilitate learnerships for employees. It is common knowledge that one can receive a tax break of R80 000 per learner and as much as R120 000 when it’s a learner with a disability. An added plus of placing your learners on a learnership, is the BEE benefits it holds. For the duration of the learnership the salary of the learner can be recognised as skills development spend. The more senior the employee, the larger the salary and the bigger the benefit for the employer. This has prompted employers to regularly place their senior staff on learnerships.
Employers must, however, be aware that the qualification a learner may have obtained prior to entering the learnership may negatively impact the tax break. Section 12(h) determines that learners qualified up to NQF level 7 and higher will only afford an employer a tax break of R40 000 per learner and R100 000 per learner with a disability. Matching the correct NQF level to the qualification is not always easy, but a simple yardstick is that if a learner has a degree (or higher) prior to entering the learnership, that learnership will necessarily afford the employer a lower tax break.
A learnership remains a great initiative to improve your workforce through skills development, to earn BEE points and to receive tax breaks – but remember to first establish the educational (NQF) levels of your staff before placing them on learnerships.
Contact Danie Krige at email@example.com or call him on 051 492 0300.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE).