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
Occupational health and safety in the COVID-19 workplace
By Jacques van Wyk, Director and Bradley Workman-Davies, Director A directive has recently been issued by the Department of Employment [...]
Moving towards the end of the lockdown – keeping it consistent and clear
by Bradley Workman-Davies, Director The last big news from Government in relation to the National Lockdown, as outlined in the [...]
Do you have temporary market power? The Competition Commission’s first finding of excessive pricing under the COVID-19 emergency regulations
by Paul Cleland, Director The Competition Commission has, by way of a settlement agreement, concluded its first investigation into excessive [...]
Joint ventures – once competition law’s ugly sister, now beloved Cinderella?
by Ahmore Burger-Smidt, Director and Head of the Data Privacy practice and Graeme Wickins, Director As the global economy is [...]
The protection of privacy and personal information. How much personal information will be enough?
One Covid-19. So many tracing apps to locate individuals. "Your recently announced project to respond to COVID–19 by tracking when [...]
Actions that may be taken to address some of the risks arising from the COVID-19 crisis in connection with M&A transactions
by Nozipho Bhengu, Director Introduction 1.1 On the 24th of March 2020, the President of the Republic of South Africa [...]
