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
Mandatory vaccinations after the state of emergency is lifted
Consolidated Direction on Occupational Health and Safety measures As has been recently published, the national state of disaster has been [...]
Continuously raising grievances in the workplace held to be a fair ground for dismissal
Raising grievances in the workplace The issue was whether the dismissal of an employee who continuously raised grievances was substantively [...]
Employees signing mutual separation agreements under duress
Signing mutual separation agreements under duress Whether a threat of police action amounts to duress when signing a mutual separation [...]
Dishonesty surrounding the breach of Covid-19 protocols in the workplace is a fair ground for dismissal
Breach of Covid-19 protocols in the workplace Issue Whether dismissal for dishonesty for infringing the employer’s Covid-19 protocols, was procedurally [...]
The pride or prejudice of being a related person to a company?
by Marvin Petersen, Senior Associate co-authored by Jarryd Mardon, Director and reviewed by Pierre le Roux, Director Introduction In terms [...]
