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
FALSE ALLEGATIONS OF RACISM MAY BE GROUNDS FOR DISMISSAL
By Jacques van Wyk, Director; Andre van Heerden, Senior Associate and Chelsea Roux, Candidate Attorney ISSUE Whether an employee [...]
DOES THE USE OF RACIST COMMENTS WARRANT DISMISSAL?
By Jacques van Wyk, Director; Andre van Heerden, Senior Associate and Chelsea Roux, Candidate Attorney ISSUE Is dismissal the [...]
Trade Marks: Changes to the canadian trade marks act
By Donvay Wegierski, Director On 17 June 2019, the Canadian Trade Marks Act will be introducing several changes pursuant to [...]
International arbitration in South Africa – a new chapter
By Des Williams, Director, Head of Arbitration Practice The enactment of the International Arbitration Act 2017 ("International Arbitration Act"), which [...]
BPR 314: An interesting ruling on several levels
By Doelie Lessing, Director and Nicholas Fairbairn, Candidate Attorney On 13 December 2018, the South African Revenue Service issued Binding [...]
Probono@Werks
DIEPSLOOT PRO BONO LAW CLINIC – PROUDLY GROWING FROM STRENGTH TO STRENGTH The Diepsloot Law Clinic opened its doors in [...]
