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
Ruling in favour of the Digital Age: Local and foreign courts give a to electronic agreements and signatures
and Karabo Kekana, Candidate Attorney Recently a Canadian court decided that a emoji constituted an electronic signature and resulted in [...]
ESG in Private Equity Funds: Insights from the Super Return Conference 2023
The integration of environmental, social, and governance (ESG) factors has become a crucial consideration for investors across various asset [...]
Powers of the Information Regulator and how the Department of Justice could have avoided a R5 million fine
There has been great anxiety amongst organisations since the Protection of Personal Information Act 4 of 2013 (POPIA) came [...]
The extent of an arbitrator’s jurisdiction
In the recent decision of Dis-Chem Pharmacies Limited v Dainfern Square (Pty) Ltd & Others[1] the Supreme Court of [...]
Exercising due caution with regard to open source software in private equity transactions
Private equity investors play a role in supporting the growth and development of companies in South Africa. When a [...]
Proposed draft legislation to replace Practice Note 31 of 1994
An indispensable requirement for the claiming of an income tax deduction is that the taxpayer must be carrying on [...]
