Legal updates and opinions
News / News
Temporary Employer / Employee Relief Scheme: tax implications
by Doelie, Lessing, Director and Andre van Heerden, Senior Associate
On 16 April 2020 the Minister of Employment and Labour issued amendments to the directives governing the Covid-19 Temporary Employer / Employee Relief Scheme (“TERS“). These must still be published in the Government Gazette. The directives provide, among others, that in order to speed up payment of Covid-19 benefits to employees, employers are urged to pay employees benefits in advance and then reimburse or set off such amounts against funds received from the Unemployment Insurance Fund (“UIF“).
While there are no express tax regulations/directives or amendments issued on whether employers should be treated as ‘agents’ when collecting payment from the UIF there is a strong basis to argue that this is the case and that the payment of these amounts to the employees should not result in a PAYE liability on the TERS benefits. PAYE must, therefore, not be deducted from the TERS benefits. It is also arguable that employees should be exempt from paying tax on the benefits received, as the tax legislation provides for a general exemption from tax of benefits or allowances payable in terms of the Unemployment Insurance Act – provided that the TERS benefits are legally payable in terms of that Act (which appears to be the intention). It is advisable, when affecting electronic payments to the employees’ bank accounts, that the amounts clearly be recorded as ‘UIF TERS benefits.’ This clearly distinguish the payments from any remuneration payments ordinarily received.
Should you require any formal advice regarding the above please do not hesitate to contact us.
Latest News
Urgent update: COVID-19 Temporary Employer / Employee Relief Scheme (“TERS”)
by Jacques van Wyk, Director; Andre van Heerden, Senior Associate; and Thabisa Yantolo, Candidate Attorney On 13 August 2020 the [...]
Unprotected strike action: An ‘essential service’ in terms of the National Disaster Management Act 57 of 2002 (“NDMA”) is not automatically regarded an essential service terms of the Labour Relations Act 66 of 1995 (“LRA”)
by Jacques van Wyk, Director; Andre van Heerden, Senior Associate; and Thabisa Yantolo, Candidate Attorney Issue Whether an essential service [...]
Whether employers are obliged to engage with unrepresentative trade unions before dismissing employees who embark on unprotected strike action
by Jacques van Wyk, Director; Andre van Heerden, Senior Associate; and Thabisa Yantolo, Candidate Attorney Issue Whether an employer is [...]
Essential Services Committee Notice
by Jacques van Wyk, Director; Andre van Heerden, Senior Associate; and Thabisa Yantolo, Candidate Attorney On 10 July 2020 the [...]
Employment Equity Amendment Bill 2020
by Jacques van Wyk, Director; Andre van Heerden, Senior Associate; and Thabisa Yantolo, Candidate Attorney On 20 July 2020 the [...]
Conduct standard for banks
by Tracy-Lee Janse van Rensburg, Director Pursuant to the Financial Sector Regulation Act, 2018 ("FSRA"), the Financial Sector Conduct Authority ("FSCA") [...]
