Are you aware of the tax incentives for learnership agreements? If not, you could be missing out on significant benefits as an employer.
Learnership agreements are a way for companies to provide their employees with workplace training and education while still earning a salary. These agreements can benefit both the employee and the employer by improving skills, increasing productivity, and ultimately contributing to the success of the business.
From a tax perspective, there are also a number of benefits to implementing learnership agreements. The South African Revenue Service (SARS) offers tax incentives for companies that engage in these agreements, including:
1. Tax deductions – Companies can claim a tax deduction for all expenses related to learnership agreements, including salaries, tuition fees, and materials. These deductions can be claimed in the same year that the expenses were incurred, which can help to reduce the overall tax liability for the company.
2. Tax credits – Companies that offer learnerships to employees with disabilities or who come from designated groups can also claim tax credits. These credits can be used to offset the company’s tax liability, which can help to reduce the overall tax burden.
3. Employment tax incentive – The Employment Tax Incentive (ETI) is a program that provides tax incentives to companies that employ young workers (between the ages of 18 and 29) who are earning less than a certain amount per month. Learnership agreements can qualify for the ETI, which can help to reduce the cost of hiring and training new employees.
To qualify for these tax incentives, companies must comply with certain requirements, including registering with the relevant SETA (Sector Education and Training Authority) and ensuring that the learnership agreement meets the criteria set out by the Department of Higher Education and Training.
In addition to the tax benefits, learnership agreements can also help to improve the skills and productivity of employees, which can have a positive impact on the overall success of the business. As such, it’s worth considering implementing learnership agreements as part of your company’s training and development program.
In conclusion, tax incentives for learnership agreements are a valuable benefit that companies should take advantage of. By offering workplace training and education, companies can not only improve the skills and productivity of their employees but also reduce their overall tax liability. If you’re interested in implementing learnership agreements at your company, be sure to consult with a tax professional to ensure that you’re complying with all the relevant requirements.