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
Direct marketing: the wild west to be tamed by POPIA
by Ahmore Burger-Smidt, Head of Data Privacy Practice The POPIA[1] centres around eight Conditions detailing how personal information should be [...]
Trade mark your cannabis concept
Brand owners take note, the movement to legalise the possession and consumption of cannabis is real. With the growing global [...]
Hey administrator, did you consult with the public and stakeholders on that decision?
A win for communities and the environment, but yet another hurdle for an ailing mining sector. The impact of the [...]
Constitutional Court judgment: CCT 265/17 Maledu v Itereleng Bakgatla Mineral Resources
On 25 October 2018, the Constitutional Court in case number CCT 265/17 handed down judgment in an application for leave [...]
Dawn raid in a box
A dawn raid can be carried out on any business, big or small, and companies must be mindful of the [...]
New Commercial Courts to include intellectual property matters
On 3 October 2018, the Judge President of the Gauteng division of the High Court issued a Commercial Court Practice [...]
