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
Revisiting Zero-Tolerance Policies: The NBCCI’s Ruling on Cannabis Use
and Hanán Jeppie - Candidate Attorney ISSUE In National Union of Metalworkers of South Africa obo Nyawuza / PFG Building [...]
Whether a workplace policy automatically forms part of or can otherwise be construed as a collective agreement
and Tasreeq Ferreria - Candidate Attorney Issue Whether the Commission for Conciliation Mediation and Arbitration (the "CCMA") was correct in [...]
Stretching Boundaries: Can a Trade Union Represent Employees Who Fall Outside of its Registered Scope in Employment Disputes?
and Yendiswa Sithole - Candidate Attorney The Constitutional Court ("the CC") in AFGRI Animal Feeds (A Division of PhilAfrica Foods [...]
The South African Reserve Bank tightens “instant payment” framework in South Africa – screen scrapers beware!
Following the COVID-19 pandemic, more people than ever are ordering goods online based on the variety of good and services [...]
FIC publishes Directive 9 to ensure CASPs comply with FATF Recommendations
- reviewer and authored by Slade van Rooyen - Candidate Attorney The Financial Intelligence Centre ("FIC") on 15 November 2024 [...]
Machine managers: AI monitoring in the South African workplace
The impact of AI on the workplace is a rapidly evolving field of study, and South Africa can look to [...]
