If you’re an employer who wants to build your business by building other people’s careers and growing individuals to become more than what they are today – then this article is for you. SARS has some amazing tax breaks and deductions. Section 12H which deal with learnerships can be claimed in addition to any other deductions that you may be eligible for and can be a significant tax saving for your business. In this blog post, we’ll explore Section 12H in detail, including what it is, who is eligible, and how you can claim the deduction.
What is Section 12H of the Income Tax Act?
Section 12H of the Income Tax Act provides for an additional deduction for employers who have entered into a learnership agreement with an employee. The purpose of this deduction is to encourage employers to invest in the development of their employees’ skills and knowledge, which ultimately benefits both the employer and the employee.
Who is eligible for the additional deduction?
To be eligible for the additional deduction, the employer must have entered into a learnership agreement with an employee that meets the following criteria:
- The agreement must be entered into under the Skills Development Act, 1998 (Act No. 97 of 1998).
- The agreement must be registered with a relevant authority, such as the Sector Education and Training Authority (SETA).
- The agreement must meet the requirements set out in Section 12H of the Income Tax Act.
If you meet all of these criteria, then you may be eligible for the additional deduction under Section 12H of the Income Tax Act.
How much is the additional deduction?
The additional deduction is equal to R30,000 for each learner in respect of whom a learnership agreement has been entered into and registered in terms of the Skills Development Act, 1998. This means that if you have entered into a learnership agreement with two employees, you may be eligible for a deduction of up to R60,000.
How do you claim the additional deduction?
To claim the additional deduction, you must complete the relevant sections of your income tax return. You will need to provide details of the learnership agreement, including the name of the learner, the date the agreement was entered into, and the amount of the deduction claimed.
It is important to note that you must keep all relevant documentation to support your claim for the additional deduction, including a copy of the learnership agreement and proof of registration with the relevant authority.
Example of how the additional deduction works
Let’s say that you run a small business and have entered into a learnership agreement with two of your employees. The learnership agreement meets all of the criteria set out in Section 12H of the Income Tax Act, and you have registered it with the relevant authority.
You can claim an additional deduction of R30,000 for each learner, which means that you may be eligible for a deduction of up to R60,000. This additional deduction will be in addition to any other deductions that you may be eligible for.
Conclusion
Section 12H of the Income Tax Act provides a significant tax benefit for employers who invest in the development of their employees’ skills and knowledge through learnership agreements. If you’re an employer who has entered into a learnership agreement with an employee, then you may be eligible for an additional tax deduction of up to R30,000 per learner.
Be sure to keep all relevant documentation to support your claim for the additional deduction and consult with a tax professional if you have any questions.
Happy investing!