Every SA business with a payroll over R500 000 is obliged by law to pay 1% of their total annual employee remuneration to SARS each year as the Skills Development Levy (SDL).
But only 20% of the SDL actually stays in SARS’ coffers, because they pay 80% of the levy over to the industry Sector Education and Training Authority (SETA) relevant to each payee. Too few companies realise that they can tailor their skills development plan so that they can claim back up to 70% of the SETA portion of the SDL.
The SETA’s administration absorbs only 10% of their allocation of the SDL, 20% funds the mandatory grant given to companies who submit their Workplace Skills Plans, Annual Training Reports and Pivotal Training Plans. The remaining 50% goes into the SETA’s Discretionary Fund which provides companies with the opportunity to apply for and receive funding towards the implementation of special training projects and Pivotal Training programmes, such as learnerships. This means that there’s a significant opportunity here for companies to actually reduce overall training costs by offering their employees or unemployed candidates specific learning opportunities.
A Learnership is a work-based learning programme directly related to an occupation or field of work that is managed by a SETA, which leads to an accredited NQF qualification. An employer needs to enter into a Learnership agreement with an employee or an unemployed candidate, which must be submitted to the SETA. Learnerships are typically implemented over a 12 month period with the learners attending an average of three days of training each month in addition to completing their portfolio of evidence containing details of how the learning has been applied in a work environment. For every learner undertaking a registered Learnership, the company can claim R60 000 in a tax rebate against the company’s income tax.
What a company needs to do step by step:
• Taking into account your growth strategies, succession planning, B-BBEE Scorecard, leadership development, upliftment programmes, employee’s career development plans and your current skills needs; identify the training, including learnerships, that would strategically most benefit your organisation and your employees;
• Register your Learnership with your SETA;
• Compile and submit a Workplace Skills Plan & Annual Training Report to your SETA. You will find either a template for the Workplace Skills Plan on your SETA’s website or a facility to submit it online; and
• Your accredited learning provider will then register the learners with the qualification and begin the learning journey.
To give you an example of what including learnerships in the company training plan can mean in money terms. If a company earns a R 1 million net profit before tax, and they put 10 candidates through learnerships, their tax is calculated at R 400 000 because they got a R600 000 tax rebate, that’s R60 000 per learner times 10. So instead of paying 28% company tax, which is R280 000 of a R 1 million, they would pay 28% of R 400 000, which is R 142 000. That’s a saving of R138 000.
Richard Rayne is the CEO of iLearn.