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BL Premium reports that the Treasury is seeking to stamp out abuse of the employment tax incentive to prevent employers claiming it on behalf of trainees rather than full-time employees.
SA Revenue Service (Sars) head of legislative policy Franz Tomasek indicated on Wednesday that the abuse was widespread. In August 2020, the SA Institute of Chartered Accountants and SA Institute of Tax Practitioners deplored the marketing of abusive schemes that involved a recruiting agency, an employer and a training institute. They created the appearance of genuine employment so that claims for the incentive could be made on behalf of trainees. Treasury officials briefed parliament’s finance committee on Tuesday on proposed amendments to the Employment Tax Incentive Act to clarify that “substance over legal form” would be considered when assessing an employer’s ability to claim the incentive. This will ensure that work is actually being performed in terms of an employment contract with the employee, who must be documented in the employer’s records as required by the Basic Conditions of Employment Act. The proposed amendment to the act will apply retrospectively to 1 March 2021. The employment tax incentive was introduced in January 2014 to provide employment for young workers aged between 18 and 29 years old by reducing the cost of hiring them. It was expanded in 2020 and 2021 to cover those aged up to 65 years to mitigate the devastating effect of the Covid-19 pandemic.
- Read the full original of the report in the above regard by Linda Ensor at BusinessLive (paywall access only)
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