Bigger Tax Break For Training Of Apprentices

During the middle seventies of the previous century there were more than a thousand Apprentices formally indentured in the Building Industry in South Africa, of which many were employed in the then Province of Natal. There is a view within Government that without more artisans, South Africa would continue to suffer poor service delivery, especially in rural areas where there are significant backlogs in infrastructure provision and maintenance.

One way of correcting this was to put money into training during the current economic downturn. The Minister of Higher Education and Training, Dr. Blade Nzimande, on 13 January 2010, announced that the Department was also taking steps to decentralise apprentice assessment facilities in an attempt to get closer to its target of producing 25 000 artisans a year, a significant jump from the current 5 600 in all sectors of the economy. Currently, it does not auger well when there is not a single apprentice registered in the designated trades in the Building Industry in KwaZulu-Natal.

In order to boost manual skills training to produce artisans, a comprehensive increased tax incentive to encourage employers to train has been announced. The previous incentive for apprentices was paid only when the apprentice qualified. With effect of June 2009 the system for apprentice incentives was aligned with that of learnership when it became an annual incentive.

The current learnership allowances were introduced during 2002 and during 2006 amended to provide favourable allowances for disabled persons trained in terms of registered learnership agreement. This and the new incentive for the training of apprentices are captured in Interpretation Note: No.20 (Issue 3) issued by SARS on 28 January 2010.

The comprehensive Interpretation Note: No.20 contains flow charts of learnership agreement/contract of apprenticeship entered into to determine whether an employer is eligible for allowances as well as learnership agreements/contracts of apprenticeship completed. In addition, there are a number case studies and worked examples how the incentives are applied.

Readers who are interested in obtaining detailed information may access the full text of SARS INTERPRETATION NOTE:NO 20 (ISSUE 3) from the Association’s website

Victor Smith | Training Manager