Page 604 - Juta's Indirect Tax

IN 10 (2) SKILLS DEVELOPMENT LEVIES ACT IN 10 (2) Interpretation Note: No. 10 (Issue 2)
DATE: ACT: SECTION: SUBJECT:
Preamble
18 August 2015
SKILLS DEVELOPMENT LEVIES ACT 9 OF 1999
SECTION 4 (c)
SKILLS DEVELOPMENT LEVY EXEMPTION: PUBLIC BENEFIT ORGANISATIONS
In this Note unless the context indicates otherwise –
• ‘PBA’ means a ‘public bene t activity’ as de ned in section 30(1);
• ‘PBO’ means a ‘public bene t organisation’ as de ned in section 30(1) and approved by the Commissioner under
section 30(3);
• ‘qualifying PBAs’ means the PBAs listed in paragraphs 1, 2(a), (b), (c), (d) and 5 of Part I of the Ninth Schedule; • ‘Schedule’ means a Schedule to the Act;
• ‘SDL’ means the skills development levy referred to in section 3 of the SDL Act, paid by an employer;
• ‘SDL Act’ means the Skills Development Levies Act No. 9 of 1999;
• ‘section’ means a section of the Act;
• ‘the Act’ means the Income Tax Act 58 of 1962; and
• any other word or expression bears the meaning ascribed to it in the Act or the SDL Act.
1. Purpose
This Note provides guidance on the interpretation and application of section 4(c) of the SDL Act,* which exempts any PBO† contemplated in section 10(1)(cN) from the payment of SDL, provided the PBO–
• solely carries on qualifying PBAs; or
• solely provides funds to PBOs that solely carry on qualifying PBAs.
2. Background
The SDL Act imposes an SDL levy on the total ‘remuneration’‡ paid or payable by the employer to the employee during any month as determined in accordance with the Fourth Schedule. Section 4 of the SDL Act contains a number of exemptions from the SDL levy. This Note, however, concentrates on the exemption under section 4(c) of the SDL Act. The Commissioner is responsible for the administration of the SDL Act, in so far as it relates to the collection of the levy payable by employers.
3. The law
Section 4(c) of the Skills Development Levies Act
4. Application of the law
4.1 Public bene t organisation carrying on public bene t activities
An organisation that claims exemption from the payment of SDL under section 4(c)(i) of the SDL Act must be a PBO which solely (see 5.5) carries on (see 5.3) any qualifying PBAs.
4.2 Public bene t organisation providing funds
An organisation that claims exemption from the payment of SDL under section 4(c)(ii) of the SDL Act must be a PBO which solely (see 5.5) provides funds (see 5.4) to other PBOs which solely carry on (see 5.3) any qualifying PBAs.
5. General meaning of certain terminology in the context of section 4(c) of the Skills Development Levies Act
5.1 Public bene t organisation
A PBO is an organisation that –
• carries on one or more approved PBAs listed in Part I of the Ninth Schedule;
* See the Guide for Employers in respect of the Skills Development Levy, issued to assist employers to understand the basic fundamentals of the SDL Act.
† See the Tax Exemption Guide for Public Benefit Organisations in South Africa and the Basic Guide to Income Tax for Public Benefit Organisations which provide information relating to PBOs and the tax implications affecting them. ‡ The term ‘remuneration’ is defined in paragraph 1 of the Fourth Schedule.
596 Juta’s IndIrect tax 2016
4. Exemptions.—The levy is not payable by—
(c) any public bene t organisation contemplated in section 10(1)(cN) of the Income Tax Act, which—
(i) solely carries on any public bene t activity contemplated in paragraphs 1, 2(a), (b), (c) and (d) and 5 of Part I of the Ninth Schedule to that Act; or
(ii) solely provides funds to public bene t organisations contemplated in subparagraph (i);