Treasury to extend learnership tax incentives

Introduced in 2009, the incumbent learnership tax incentives, designed to encourage skills development by companies, came to a conclusion at the end of September this year. After consideration, based on a review that determined that these rebates have had a positive impact on training and skills development over the last five years, Treasury has now submitted a proposition to extend learnership tax incentives until 31 March 2022.

“This is good news for companies who have been optimising on the rebates offered by instituting meaningful, accredited learnerships as part of their organisation’s formal training programme,” says Richard Rayne, CEO of iLearn, a leading South African learning solutions business.

Between 2009 and 2014, South African companies implemented 447 721, formally-agreed upon and fully-reported, learnerships. However, at this time, there are still 19 682 registered learnership contracts which would benefit from the incentive extension.

“The fact that learnership incentives were valued by the fiscus at R 6.3 billion from 2009 to 2014, and totalled R 966 million in the 2014 tax year, is a clear indication that this is a worthwhile strategy rewarded by a significant rebate that benefits South African companies,” adds Rayne.

Description: C:\Users\Gennaro1\Desktop\shutterstock_120251185.jpg A learnership is a work-based learning programme, managed by the Sector Education and Training Authorities (SETAs), and is directly related to an occupation or field of work that leads to a NQF qualification. Businesses looking to undertake skills development either for their own talent pipeline or to contribute towards education in the country, can enter into learnership agreements with their current employees or with unemployed people. In terms of incentives, learnerships offered to disabled people earn premium rebates. Learnerships are typically implemented over a 12-month period with the learners attending an average of three days’ training each month, in addition to completing their assessments.

Treasury has now proposed not just the extension of the learnership tax incentive to the 31st of March 2022, but also adjustments to the value of the deductions based on the qualification level of the learner entering into a learnership agreement. The purpose of this is to improve targeting the incentive towards more technical skills.

Previously, every learnership incentive for an abled-bodied person resulted in a R30 000 rebate on entry into the agreement, and another R30 000 on completion of the learnership. The plan going forward is to shift the emphasis to gaining the technical skills outlined by the National Qualifications Framework (NQF) by offering a R 40 000 incentive for every learnership addressing NQF levels 1 to 6, and R 20 000 for each learnership addressing NQF levels 7 to 10, which relate to the range of University degrees. In the case of a learnership being offered to a disabled person, these incentives increase to R 60 000 and R 50 000, based on the same respective NQF distinctions.

“What is critical for businesses to note,” Rayne points out, “Is that these incentives are, of course, great and worthwhile from a financial perspective, but there is a lot more to be gained from making truly effective learnerships an integral part of your organisation’s learning and talent management culture.”
According to Rayne, the benefits of offering accredited learnerships also include:

· Building an effective workforce

· Connecting learning to career paths

· Developing skills amongst job seekers and future employees

· Improving B-BBEE scores

· Proactively managing your talent pipeline

iLearn is an accredited organisation providing NQF learnership programmes addressing NQF levels 2 to 5, and these include:

· Business Management Learnerships

· Business Administration Learnerships

· Contact Centre Learnerships

· Project Management Learnerships

· IT Learnerships

“Ultimately, learnerships are an effective strategy to ensure that your business is empowered by a relevant skills base over the long term. The unique advantage of accredited learnerships is that they are work-based and delivered onsite,” concludes Richard, “They can be specifically and strategically designed to meet your organisation’s needs and be embedded within the context of your organisation’s objectives and goals for growth.”

The relevant legislation has been proposed and was open for Public Comment until the 10th of October 2016. The draft legislation is still to be promulgated by the President and is, therefore not yet in force.