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
An employer’s obligation to comply with their own policies
by Jacques van Wyk, Director, Michiel Heyns, Senior Associate and, Kelly Sease, Candidate Attorney Issue Whether an employer is obliged to [...]
Cybercrimes and Business Interruption
by Darren Willans, Director, Sarah Passmoor, Director and Chiara Ferri, Candidate Attorney Cybercrimes and Business Interruption Cybercrimes and Business Interruption [...]
Important legal changes that trustees must know
Important Legal Changes It has been widely publicised that, in an attempt to head off grey-listing, there have been legal [...]
An exercise in restraint of trade agreements, what not to do!
by Bradley Workman‑Davies, Director, Kerry Fredericks, Director and Benedict Ngobeni, Candidate Attorney Restraint of trade agreements are characterised by the [...]
ChatGPT: magic bullet or the beginning of the end?
Only two months ago, OpenAI Incorporated (OpenAI), an American artificial intelligence research laboratory, launched the Chat Generative Pre-trained Transformer, more [...]
Technology, Media and Telecommunications Africa Quarterly e-Bulletin
This Africa Quarterly e-bulletin highlights key legislative and regulatory developments in the technology, media and telecommunications sectors in sub-saharan Africa. [...]
