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
The sword finally falls, ironically on justice itself | DoJ fine by Information Regulator
What is the price that one pays for not having antivirus software? R5 million according to the Information Regulator [...]
The settlement agreement concluded at the ILO has not changed the new Employment Equity interventions
In 2021, a complaint was filed with the International Labour Organisation (ILO) against the South African Government in relation [...]
Time to focus! Comments called for on the Electronic Communications Amendment Bill
and Chiara Ferri, Candidate Attorney The Electronic Communications Amendment Bill, 2022 (the Bill), has been published for comment and aims [...]
National Health Insurance: What benefit; for whom, where and how?
As has widely been reported in the media, the National Health Insurance Bill[1] or the Bill has been passed [...]
The Supreme Court of Appeal steps in to protect the rights of dual-citizens
Many South Africans were unaware that, until 13 June 2023, if they acquired citizenship in another country (other than [...]
When a séance to raise the dead is permissible… SCA makes finding on nature of discretion exercised when setting aside a winding-up order
An order setting aside a winding up order is akin to raising the dead - especially if the winding-up [...]
