Investing in skills development through learnerships has become increasingly vital. Not only does it empower employees, but it also allows companies to benefit from various government incentives such as the skills development rebate, SDL levies, 12H, and ETI. Understanding how to leverage these mechanisms is crucial for maximizing the return on investment in skills development.
Skills Development Levy (SDL) Levies and 12H
The Skills Development Levy (SDL) is a mandatory levy that employers must pay to SARS, which is aimed at promoting skills development in South Africa. However, companies can claim back a portion of their SDL contributions through the skills development rebate. By implementing learnerships, companies can qualify for the 12H tax incentive, which allows them to claim an additional deduction on their taxable income based on the number of qualifying learners employed.
Employment Tax Incentive (ETI)
The Employment Tax Incentive (ETI) is another valuable incentive for companies engaging in learnerships. ETI provides a tax incentive to employers for hiring young, less experienced workers. By participating in learnerships, companies can benefit from the ETI, reducing the cost of employment and making it more affordable to train and upskill new employees.
Optimizing Skills Development Initiatives
To take full advantage of these incentives, companies should ensure that their learnership programs are structured to meet the requirements for the skills development rebate, SDL levies, 12H, and ETI. This might involve working closely with training providers, understanding the legislative requirements, and carefully documenting the training process.
Furthermore, companies should invest in developing robust reporting and tracking mechanisms to accurately capture the relevant data needed for claiming the rebates and incentives. By demonstrating compliance and the positive impact of their learnership programs, companies can maximize their returns while contributing to the growth of a skilled workforce.
The skills development rebate, SDL levies, 12H, and ETI present significant opportunities for companies to enhance their learnership programs and drive sustainable skills development. By strategically leveraging these incentives, businesses can not only invest in the growth and development of their workforce but also benefit from valuable financial incentives provided by the government. Embracing these opportunities can lead to a win-win situation for both employers and employees, ultimately contributing to a more skilled and competitive workforce in South Africa.
Let’s consider a basic calculation to illustrate the potential benefits for employers with 100 learners on a learnership program, taking into account the skills development rebate, SDL levies, 12H, and ETI.
Assuming the following:
1. Skills Development Levy (SDL) rate: 1% of total employee remuneration
2. Average monthly remuneration per learner: R6,000
3. 12H tax incentive rate: 100% of the qualifying learner’s remuneration
4. Employment Tax Incentive (ETI) for qualifying learners: R1,000 per month
Skills Development Rebate:
SDL Contribution for 100 learners = 100 * R6,000 * 1% = R6,000 per month
Assuming the company qualifies for a full skills development rebate, they would be able to claim back the full R6,000 SDL contribution per month, leading to a total annual rebate of R72,000.
12H Tax Incentive:
Total monthly 12H tax incentive for 100 learners = 100 * R6,000 = R600,000
Assuming the company qualifies for the full tax incentive, they would be able to deduct the full R600,000 from their taxable income.
Employment Tax Incentive (ETI):
Assuming all 100 learners qualify for the ETI, the total monthly incentive would be:
100 * R1,000 = R100,000
For the purpose of this example, let’s assume the learners are employed for the full tax year.
In summary, for 100 learners on a learnership program, the potential benefits for the employer would be:
– Skills Development Rebate: R72,000 per year
– 12H Tax Incentive: R600,000 per year
– Employment Tax Incentive: R100,000 per year
It’s important to note that the actual benefits may vary based on specific eligibility criteria, the nature of the learnerships, and other factors.
At CoetzeeHR Consultants, we have procured the services of several Skills Development Providers with a level 1 B-BBEE score. Contact a consultant today, to discuss your options to embark on a learnership by mailing skills@coetzeehr.co.za
#eti #learnerships #wsp #skillsdevelopment
