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
Some more exemptions from Competition Law during the pandemic
Competition Law during the pandemic We have previously reported on the various block exemptions issued by the Minister of Trade, [...]
The impact of COVID-19 on the use of common areas
by Fátima Rodrigues, Director and Head of the Property Law & Real Estate practice (Johannesburg) and Yatheen Ramnath, Candidate Attorney [...]
Cancellations and postponements of dividends
by Kevin Trudgeon, Director; Brian Price, Director; and Raquel Goncalves, Candidate Attorney The COVID-19 outbreak, the subsequent lockdown and other [...]
A jack of all trades or jacking the trades of others: A case of having your fingers burnt in too many pies
National Union of Metal Workers Of South Africa V Lufil Packaging (Isithebe) (A Division Of Bidvest Paperplus (Pty) Limited) (Unreported) [...]
Extension of council main agreements
By Jacques van Wyk, Director and Thabisa Yantolo, Candidate Attorney On 4 May 2020 the Minister of Employment and Labour, [...]
Must fees fall? The impact of the lockdown on school fees
By Thomas Karberg, Candidate Attorney Reviewed by Bulelwa Mabasa, Director and Head of the Land, Reform Restitution & Tenure practice [...]
