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
Can business rescue minimise the effects of COVID-19 on your business?
by Walid Brown, Director and Elzaan Haynes, Candidate Attorney Business Rescue is aimed at creating a culture of corporate rescue [...]
Exemption of managers of collective investment schemes from certain requirements relating to the administration of portfolios
by Hilah Laskov, Senior Associate and Chelsea Roux, Candidate Attorney Reviewed by Shayne Krige, Director and head of the Investment Funds & [...]
Urgent update: directions regarding e-commerce sales during Alert Level 4 of the COVID-19 national state of disaster
by Jacques van Wyk, Director; Andre van Heerden, Senior Associate; and Thabisa Yantolo, Candidate Attorney On 14 May 2020 the [...]
Could accelerating the development and construction of renewable energy projects assist in rebuilding the economy?
by Nozipho Bhengu, Director and Tsebo Masia, Candidate Attorney 1.1 On 13 May 2020, the President of South Africa addressed [...]
Urgent update: directions issued regarding the sale of clothing, footwear and bedding during Alert Level 4
by Jacques van Wyk, Director; Andre van Heerden, Senior Associate; and Thabisa Yantolo, Candidate Attorney On 12 May 2020 the [...]
Urgent update: directions on micro and small business trading in permitted services
by Jacques van Wyk, Director; Andre van Heerden, Senior Associate; and Thabisa Yantolo, Candidate Attorney On 10 May 2020, the [...]
