TAX BREAK ON LEARNERSHIPS – RELEVANT OR NOT? 18 July 2019

So, you’ve heard the advert on the radio where paying for a learnership offers you a tax break.  It sounds good – you’re helping a learner with their education and SARS is offering a tax break, but is it relevant to your business?

As with most things tax-related, there are conditions and requirements before the tax break can apply.

Let’s first look at how the tax break works.  The tax break is an allowance that you can deduct from your taxable income, on which the tax payable is then calculated.  Simply demonstrated as follows:

You can deduct up to a maximum of R80 000 per able-bodied learner and R120 000 per disabled learner each year.  This is a mahala allowance, i.e. an additional deduction for an expense that you did not incur,  effectively saving you a maximum of R22 400 or R33 600 respectively, in taxes per learner.  The allowance is dependent on a number of factors, for example, the employee’s current NQF level, the length of the learnership agreement, etc.

Can this allowance apply to you?  Let’s look at the conditions and requirements stipulated by the Income Tax Act.

1. Learnerships must be registered with the SETA
2. Agreement with the learner, must be entered into with the employer
3. Agreement must be entered into in the course of the employer’s trade from which income is derived

If all 3 of the above apply to you, you may be eligible for the learnership allowance as prescribed by section 12H of the Act.  Apprenticeships are also specifically included in the definition of a learnership.

For more information on the different SETAs, please refer to the link https://www.vocational.co.za/

If you think your business qualifies for the learnership allowance, speak to your accountant or contact us to speak to one of our tax consultants.  You can help uplift your employees and receive a tax break in the process.

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