Page 363 - SAIT Compendium 2016 Volume2

IN 20 (6) Income Tax acT: InTeRPReTaTIon noTes IN 20 (6)
Example 8 – The determination of the amount deductible as a learnership allowance
Facts:
ABC (Pty) Ltd (ABC) concluded learnership agreements with employees X, Y, Z, and employee D who is a person with a disability, pursuant to a trade carried on by ABC. The learnership agreements with X, Y, Z and D have been registered with the relevant SETA and titles and codes have been allocated and issued by the Director- General: Department of Labour. ABC has a 31 March year-end. Assume that the current provisions of section 12H remain unchanged for the duration of the learnerships.
(a) Employee X
X entered into a three-year learnership on 1 October 2011. The learnership agreement was only registered with the SETA on 1 December 2011. The learnership is completed successfully on 30 September 2014.
(b) Employee Y
Y entered into an 18-month learnership on 1 April 2013. On 15 October 2013 Y left the employ of ABC without transferring the learnership to a new employer under the Skills Development Act.
(c) Employee Z
Z entered into a 12-month learnership agreement on 1 July 2013. At the end of the 12 month period Z failed this learnership and immediately entered into a new learnership with ABC which, according to the SETA, has the same education and training component as the 12-month learnership, but extends over a two-year period instead.
(d) Employee D
D, a person with a disability, entered into an 18-month learnership agreement on 1 April 2013. Assume that on 30 September 2014 D successfully completed the learnership.
Result:
(a) Employee X
Year of assessment ending 31 March 2012
An annual allowance of R10 000 (R30 000 × 4 / 12) is deductible because the learner is a party to a registered learnership agreement with the employer for only four months (1 December 2011 to 31 March 2012). Section 12H(2) (c), which deems registration of the learnership to occur on the date of commencement of the learnership, is only applicable to learnership agreements concluded on or after 1 January 2013. The allowance is therefore calculated from the date of registration rather than the date of commencement of the learnership
Year of assessment ending 31 March 2013
An annual allowance of R30 000 is deductible because the learner is a party to the registered learnership agreement with the employer for 12 full months.
Year of assessment ending 31 March 2014
An annual allowance of R30 000 is deductible because the learner is a party to the registered learnership agreement with the employer for 12 full months.
Year of assessment ending 31 March 2015
1. An annual allowance of R15 000 is deductible because the learner is a party to the registered learnership agreement with the employer for only six full months. R30 000 × 6 / 12 = R15 000
2. A completion allowance of R60 000 is deductible, which is calculated as R30 000 × 2 = R90 000
The completion allowance that is deductible, equals R30 000 × 2 because there are two consecutive 12 full month periods within the duration of the registered learnership agreement which was only registered on 1 December 2011.
(b) Employee Y
Year of assessment ending 31 March 2014
An annual allowance of R15 000 is deductible because the learner is a party to the registered learnership agreement with the employer for only six full months.
R30 000 × 6 / 12 = R15 000
The learner left the employ of the employer and therefore the registered learnership agreement is terminated and no further annual allowance or any completion allowance is deductible for that agreement.
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