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
National Health Act update
National Health Act 61 of 2003 The Minister of Health ("the Minister") published, for public comment various regulations in terms [...]
The management of COVID-19 in the workplace
COVID-19 in the workplace On 4 April 2022, the Minister of Cooperative Governance and Traditional Affairs ("the Minister") terminated the [...]
The hazardous biological agents regulations: COVID-19 in the workplace
Hazardous Biological Agents by Jacques van Wyk, Director, Andre van Heerden, Senior Associate, and Danelle Plaatjies, Candidate Attorney The Minister [...]
FAQ | Opportunities for investors arising from the South African business rescue process
The South African business rescue process has created the opportunity for investors (local and foreign) to position themselves in order [...]
Paint-by-numbers: Competition law litigation against Google and Meta
Online Intermediation Platforms Market Inquiry Is it with bated breath that one should await the outcome of the Online Intermediation [...]
Is South Africa in a state of procurement limbo? Where to from here, for now?
Public procurement in South Africa by Sarah Moerane, Director, and Koketso Rapoo, Candidate Attorney Public procurement in South Africa is [...]
