“We need to give importance to skill development because this way we can end unemployment.” (Narendra Modi, Prime Minister, India)
Since 1999, the Skills Development Levy (SDL) has served to fund skills development in the country. It encourages a planned and structured approach to skills development so employers, employees and the economy can benefit from a better skilled and more productive workforce.
All South African companies with a payroll exceeding R500,000 per year (that’s just under R42,000 per month) – including salaries, wages, overtime payments, leave pay, bonuses, fees, commissions and lump sum payments, and with certain specific exclusions – are required to pay SDL of 1% of the total amount paid in salaries to employees each month. It is declared and paid by employers to SARS with the other monthly employee taxes (PAYE and UIF) via the Monthly Employer Declaration (EMP201) and is then paid over to the relevant SETA by SARS.
Employers can claim back more than half of the levies paid each year, but most miss the opportunity by not meeting the stipulated requirements. Depending on the size of a company’s payroll, this could be a substantial amount. There are also other benefits that can be unlocked by meeting the requirements for claiming back the levies paid.
We briefly summarise below the benefits of claiming back the SDL paid, as well as how to do it in the most efficient way.
Benefits of claiming back levies paid
- Claiming ensures valuable revenue is not forfeited – up to 70% of SDL paid to SARS in the financial period can be claimed back through the mandatory grant and other avenues.
- 20% of the levy paid can be claimed via the mandatory grant, paid by the Seta every quarter, which is accessed as follows:
- Appointing and registering a skills development facilitator (SDF)
- Timeously submitting an approved Workplace Skills Plan (WSP)
- Timeously submitting an Annual Training Report (ATR) based on the WSP.
- 50% of levies paid can be claimed in discretionary grants for learnerships, skills programmes, apprenticeships, workplace experience placements, internships and bursaries, and organisations can apply using the same requirements for claiming the mandatory grant.
- By offering SETA-accredited training, for example, mandatory training and registered learnerships, further tax rebates can be accessed.
- Successful submission of the required reports will earn your company points for the Skills Development priority element under the revised B-BBEE Codes.
- The WSP and ATR reports contain similar labour demographics information as the Employment Equity reports, facilitating improved employment equity management in the workplace.
- Skills development initiatives positively promote a better skilled and more productive workforce, as well as proper succession planning.
- Submitting the reports provides important sector information to the SETAs (Sector Education and Training Authorities), which informs the development of the SETA’s sector skills plan (SSP) and ultimately the National Skills Development Plan.
How to claim back levies paid
- Appoint a suitably qualified and registered SDF to facilitate the training needs within the organisation and liaise with the SETA.
- Companies with 50 or more employees need to establish and consult with a Skills Development Committee before the submission of the skills report.
- Submit the Workplace Skills Plan and Annual Training Report for the period 01 April to 31 March via a registered SDF to the SETA with which the business is registered.
- Workplace skills plans detail a company’s skills needs and the skills development interventions to address these needs, providing access to mandatory grants.
- Annual training reports reflect the actual training data of the previous year, showing how priority skills defined in the Workplace Skills Plan have been addressed.
- Keep records of all training provided, including attendance registers, invoices and all certifications.
Ask your accountant for help if you are uncertain about anything.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.