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
Striking a balance: The impact of strike violence on protected strikes
Danelle Plaatjies - Candidate Attorney and Hanan Jeppie - Candidate Attorney Issue Whether a protected strike that was characterised [...]
Employee entitlements in the event of employer death
and Danelle Plaatjies - Candidate Attorney When the employment relationship ends due to the death of the employer, it terminates [...]
Caught on the sidelines: The cost of employee sick leave abuse
Danelle Plaatjies - Candidate Attorney and Yendiswa Sithole - Candidate Attorney What is an employer to do when an employee [...]
Court orders un-redacted documents be provided to SARS
Section 46 of the Tax Administration Act, 2011 (TAA) allows SARS to request 'relevant material' in relation to a taxpayer [...]
The Competition Commission’s Revised Final Public Interest Guidelines: A Critical Framework for Merger Analysis
and Chiara Ferri - Candidate Attorney Introduction The South African Competition Commission ("Commission") has published its final revised Public Interest [...]
Constitutional Court considers evictions in the inner-city of Cape Town
On 27 February 2024, the Constitutional Court heard oral arguments in the matter of Charnell Commando and Others v City [...]
