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
Housing consumer rights headed in the right direction
Assisted by Alexi Andropoulos, Candidate Attorney On Monday, 27 January 2025, while global news headlines flooded with the Expropriation Bill [...]
Expropriation Act: Deconstructed and Demystified
President Cyril Ramaphosa signed the Expropriation Bill into law on 23 January 2025. The newly assented to Expropriation Act No. [...]
Breaking News – Supreme Court of Appeal Rules on Voting Rights of Post-Commencement Creditors in Business Rescue in Landmark Judgment
The Supreme Court of Appeal (SCA) in Mashwayi Projects (Pty) Ltd v Wescoal Mining (Pty) Ltd has delivered a significant [...]
Key Updates to the Code of Good Practice on Dismissal: A Comparison of the 2025 Draft and the Original Framework
On 22 January 2025, the Department of Employment and Labour issued a draft update to the Code of Good [...]
Are CCMA and Bargaining Council Subpoenas Meeting Legal Standards? A Closer Look at Substantive Compliance
and Rekgopetše Pula, Candidate Attorney Since inception, the issuance of subpoenas by the Commission for Conciliation, Mediation and Arbitration [...]
Privacy. Who is looking after the children?
As we celebrate International Privacy Day on 28 January 2025, we are called to look inward and ask how the [...]
 
											
				 
                                                                                                                                                                                                             
                                                                                                                                                                                                            




