Page 361 - SAIT Compendium 2016 Volume2

IN 20 (6) Income Tax acT: InTeRPReTaTIon noTes IN 20 (6)
Example 5 – Completion date
Facts:
On 1 January 2011 X entered into a three-year registered learnership agreement. X completed the learnership on 31 December 2013. The SETA was noti ed of the completion of the agreement on 30 January 2014. The SETA informed the employer on a letter dated 1 February 2014 that the learnership had been successfully completed. The employer was in possession of documentary proof dated 31 December 2013 from the training provider that the learnership had been successfully completed. The employer’s year of assessment ends on 31 December.
Result:
The completion allowance is based on R30 000 multiplied by the number of completed 12-month periods within the duration of the agreement. In this instance the agreement covered a three-year period and the quantum of the allowance is thus R30 000 × 3 = R90 000. The completion allowance is only granted once the learner has successfully completed the learnership. At the end of the 2013 year of assessment (31 December 2013) the employer was in possession of adequate proof of successful completion from the training provider and may claim the completion allowance of R90 000.
4.8 Substitution of employers
Under section 17(5) of the Skills Development Act an employer may be substituted with the consent of the learner and approval of the SETA that registered the learnership agreement. As a result, when a learner moves from Employer A to Employer B –
• Employers A and B will be entitled to claim a pro rata portion of the annual allowance in the year of assessment in
which the learner changes employment;
• Employer A will not be entitled to any further annual allowances or the completion allowance;
• Employer B will be entitled to future annual allowances, subject to apportionment in the year of completion if the nal
period consists of less than 12 full months; and
• Employer B will be entitled to the completion allowance provided that the learner successfully completes the
learnership while in Employer B’s employ.
Example 6 – Substitution of employer
Facts:
On 1 January 2013 Employer G entered into a three-year registered learnership agreement with Learner H (not a person with a disability). Employer G’s year of assessment ends on 31 December. Assume that on 1 July 2014 Learner H left the employment of Employer G and took up employment with Employer K (31 December year-end) and complied with the provisions of the Skills Development Act regarding substitution. Assume further that Learner H successfully completed the learnership on 31 December 2015. Calculate the amounts of the commencement and completion allowances that each of the employers may deduct in the 2013, 2014 and 2015 years of assessment.
Result:
Employer G
2013 Year of assessment
Employer G may deduct an annual allowance of R30 000 under section12H(2)(a).
2014 Year of assessment
Employer G may deduct a pro rata annual allowance of R15 000 under section 12H(2)(b), (6 / 12 × R30 000) because Learner H is a party to the learnership agreement with Employer G for only six full months in the year ofassessment.
2015 Year of assessment
Employer G is not entitled to deduct any amount for either the annual allowance or the completion allowance because Learner H is no longer a party to a registered learnership agreement with Employer G.
Employer K
2013 Year of assessment
Employer K is not entitled to deduct any annual allowance because Learner H is not a party to a learnership agreement with Employer K.
2014 Year of assessment
Employer K may deduct a pro rata annual allowance of R15 000 under section 12H(2)(b) (6 / 12 × R30 000) because Learner H is a party to the learnership agreement with Employer K for only six full months in the year of assessment.
2015 Year of assessment
Employer K may deduct an annual allowance of R30 000 under section 12H(2)(a) because Learner H is a party to the learnership agreement with the employer for 12 full months. Employer K may also deduct a completion allowance of R90 000 under section 12H(4), which is calculated as R30 000 × 3, since there are three periods of 12 full months within the duration of this agreement.
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