Page 360 - SAIT Compendium 2016 Volume2

IN 20 (6) Income Tax acT: InTeRPReTaTIon noTes IN 20 (6)
4.7 The quantum of the completion allowance
The completion allowance is granted once-off in addition to the annual allowance and is deductible in the year of assessment in which the learner successfully completes the learnership. SARS requires suf cient proof of the successful completion of the learnership agreement in order to allow the completion allowance as contemplated in section 12H. Normally con rmation from the relevant SETA is deemed by SARS to be con rmation of successful completion. Many employers, however, are having dif culty in obtaining this con rmation from the SETA in the year of assessment in which the learnership was completed.
In view of these dif culties SARS will consider alternative proof. Any objective evidence as proof of successful completion will be accepted, for example –
• a statement of results issued by an accredited training provider;*
• an evaluation report by a registered assessor† on workplace experience.
A speci c list of what is considered to be objective evidence cannot be provided, however, each case will be determined on its own facts. Besides the objective evidence of successful completion the employer must also satisfy SARS that it did take reasonable steps to request con rmation of completion from the SETA.
4.7.1 Learnership agreements for less than 24 full months
The quantum of the completion allowance is equal to –
• R30 000; or
• R50 000 if the learner is a person with a ‘disability’ as de ned in section 18(3).
Example 3 – Calculation of the completion allowance – learnership agreement of less than 24 months
Facts:
On 1 January 2013 Employer C entered into an 18-month registered learnership agreement with Learner D (not a person with a disability). Employer C’s year of assessment ends on 31 December. Calculate the amount of the completion allowance Employer C may deduct if Learner D successfully completes the learnership.
Result:
2014 Year of assessment
The learnership will only be completed during the 2014 year of assessment. The learnership agreement is for less than 24 full months. Employer C may deduct a completion allowance of R30 000 on the completion of the learnership under section 12H(3).
4.7.2 Learnership agreements equal to or exceeding 24 full months
The quantum of the completion allowance is equal to –
• R30 000 multiplied by the number of consecutive 12-month periods within the duration of that learnership agreement;
or
• R50 000 multiplied by the number of consecutive 12-month periods within the duration of that learnership agreement
if the learner is a person with a ‘disability’ as de ned in section 6B(1).
For purposes of this calculation only full periods of 12 months are taken into account.‡
Example 4 – Calculation of the completion allowance – learnership equals or exceeds 24 months
Facts:
On 1 January 2013 Employer E entered into a registered learnership agreement with Learner F (not a person with a disability) for two and a half years. Employer E’s year of assessment ends on 31 December. Calculate the amount of the completion allowance Employer E may deduct at completion if Learner F successfully completes the learnership.
Result:
2015 Year of assessment
Under section 12H(4) Employer E may deduct a completion allowance of R60 000, which is calculated as R30 000 × 2 since there are two periods of 12 full months within the duration of the agreement.
Note: The employer may only deduct the completion allowance or any portion of it if the learner successfully completes the learnership.
The registered learnership agreement may provide for an extension of the training period when the employer is not satis ed that the learner has met the required level of competency. Such an extended period will qualify for the purposes of section 12H(4).
* A training centre or college accredited by the SETA. † Registered with the SETA.
‡ Section 12H(4).
352 saIT comPendIum oF Tax LegIsLaTIon VoLume 2