Page 358 - SAIT Compendium 2016 Volume2

IN 20 (6) Income Tax acT: InTeRPReTaTIon noTes IN 20 (6)
The key features of these allowances are that –
• the annual allowance is subject to a pro rata reduction if the registered learnership agreement does not cover the full
12 months during any year of assessment [section 12H(2)(b)];
• different rules apply in determining the completion allowance for registered learnership agreements spanning periods
of less than 24 months, and those which cover a longer period [section 12H(3) and (4)]; and
• the quantum of these allowances is increased if the learner is a person with a disability [section 12H(5)].
4.1 Registered learnership agreement
A ‘registered learnership agreement’ as de ned in section 12H(1) comprises an agreement registered in accordance with the Skills Development Act and entered into between the learner and the employer before 1 October 2016.
The reference to ‘apprenticeships’ was removed with the 2012 amendment with effect from 1 January 2013. However, this does not mean that apprenticeships are no longer provided for by the section. The de nition of ‘learner’ in section 12H refers to a ‘learner’ as de ned in the Skills Development Act. Section 1 of the Skills Development Act de nes a ‘learner’ as including anapprentice.
Until 31 December 2012, the deduction was only available to those learnership agreements which had been of cially registered with a SETA. In practice registrations were always delayed because of a variety of reasons which would then negatively affect the deduction.
With effect from 1 January 2013, under section 12H(2)(c), any learnership agreement which has not been registered from the inception of the agreement will be deemed to have been registered on the date it has been entered into, provided it is registered within 12 months after the last day of the employer’s year of assessment.
4.2 Requirements for the deduction of the annual allowance
The employer will qualify for the annual allowance if –
• during any year of assessment the learner is a party to a registered learnership agreement with the employer; • the agreement had been entered into pursuant to a trade carried on by that employer; and
• the employer has derived ‘income’ as de ned in section 1 from that trade.
The allowance only applies to a period during which a learner is a party to a registered learnership agreement with an employer. Thus an employer will not qualify for the annual allowance during any period in which –
• a learnership agreement is not registered, subject to the deeming provision of section 12H(2)(c); or
• a learner is not in employment.
The de nition of ‘employer’ in section 12H(1) merely clari es or expands the meaning of that term. A learner who has not yet commenced employment cannot have an agreement with an ‘employer’ because there is no employment relationship between them.
Example 1 – Date of commencement of annual allowance
Facts:
An employer’s year of assessment ends on the last day of February.
An employee commenced employment on 3 January 2014 and signed a three-year learnership agreement on 10 January 2014. The agreement was only registered on 1 March 2014.
Result:
The employer will be entitled to an annual allowance during the year of assessment ending on 28 February 2014 because –
• the learnership agreement was entered into within 12 months of the end of the 2014 year of assessment, namely, on
1 March 2014; and
• is accordingly deemed to have been registered on 10 January 2014 when the learnership agreement was entered into.
4.3 Requirements for the deduction of the completion allowance
The employer will qualify for the completion allowance if –
• during any year of assessment the learner is a party to a registered learnership agreement with the employer; • the agreement had been entered into pursuant to a trade carried on by the employer;
• the learner successfully completes the learnership during the year of assessment; and
• the employer has derived ‘income’ as de ned in section 1 from that trade.
Section 12H(2) states that –
‘there must, in that year, be allowed to be deducted from the income derived by that employer from that trade an amount of R30 000’.
The above wording requires that the deduction be made against income derived from the particular trade in which the employee is employed. This means that there must at least be some income from the particular trade in order to achieve the deduction. The wording does not, however, prevent the allowance from creating a loss from the particular trade. There is also nothing in the wording to prevent such a loss from being set off against income from another trade.
4.4 Enhanced allowances – learners with a disability
In order to encourage employers to develop the skills of persons with a disability, the annual and completion allowances are increased by R20 000 for a learner who has a ‘disability’ as de ned in section 6B(1) at the time of entering into the
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