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Skills Development Levy

This act ensures that there will be money available to pay for the training of people as is stipulated by the Skills Development Act. This act is designed to make training affordable.

What is the purpose of the Skills Development Levy?

The short supply of skilled staff is a serious obstacle in any competitive industry and no different in South Africa. The levy grant scheme aims to expand the knowledge and competencies of the labour force resulting in improvements in employability and productivity. This is achieved through new approaches to planning for training, learning programmes, incentives and an improved employment service. The incentive here is to participate fully in the scheme so you will reap the benefits of a better skilled and more productive workforce.

Why pay towards this levy grant scheme?

The payment towards this levy grant scheme is legislated in terms of the Skills Development Levies Act. The intention is to stimulate skills development by enabling employers to reclaim some expenditure on skills development initiatives.

Who pay’s the levy?

Every employer in South Africa who:

  • Is registered with SARS for PAYE

  • Has an annual payroll in excess of R250 000.

Who has to register?

Every employer who is liable to pay the levy must register for the payment of the levy with SARS by completing a registration form.

In order to register the employer must:

  • Obtain a registration form from any SARS office

  • Choose a sector that represents your business type from the classification guide.

Are there any exemptions?

Yes, exemptions are applicable if certain provisions are met. Application for such exemptions is contained in the application form, issued by the Commissioner of SARS, who will ultimately adjudicate whether you qualify for exemption or not.

How are levies payable?

Each month SARS will provide all registered employers with a “Return for remittance” form that will enable you to calculate the amount payable and effect payment.

What amount is payable?

The amount payable will be calculated as follows:

  • 1st year: 0,5% of the total amount of remuneration paid to employees. Any prescribed exclusions that are not be levied are subtracted from the total remuneration.

  • 2nd year and onwards: 1% of the total amount of remuneration paid to employees. Any prescribed exclusions that cannot be levied are subtracted from the total remuneration.

When do you have to pay the Levy?

The levy must be paid over to SARS not later than SEVEN days after the end of the month in respect of which the levy is payable.

What about penalties and interest?

Interest is payable at the prescribed rate on late payments. A penalty of 10% will be levied on the unpaid amount.

What happens to the levies paid?

The levies paid to SARS will be deposited into a special fund from where 80% of it will be distributed to the relevant SETAs as indicated on the registration forms, and the balance, 20%, will be paid into the National Skills Fund. SETAs will in turn pay levy grants to qualifying employers, while the National Skills Fund will fund skills development projects not within the scope of SETAs.

What if I’m already in a training program?

The levy still has to be paid but you should be eligible for a grant.

Recover as a grant rather than a Levy?

In the first year of the levy grant scheme you can recover in grants a minimum of 50% of the levy you paid on condition that you meet all the requirements for the different grants. The details of these requirements will be issued to you by your SETA.

The Levy Grant System was revised in 2005:

  • Levy-paying companies: up from R250 000 to R500 000

  • Discretionary Grant: up from 10% to 20%

  • Mandatory Grant: down from 60% o 50%

  • In total a company can still claim back 70%

What are the benefits of the Skills Development Levy?

If your company promotes training and learning in the workplace and you pay your Skills Development Levy every month, you are entitled to the following benefits:

  • Skills development grants

  • Substantial tax allowances when you implement learning programs in your company.