Tax practitioners recommend incentives for youth employment
20 February 2013
Posted by: SAIT Technical
By Business Day
SAIT last year submitted a proposal to Treasury that recommended the relaxation of the strict learnership tax incentive allowance in the Income Tax Act. SAIT head of tax policy and research, Sharon Smulders, said this would ensure the wage subsidy was linked to a tax incentive rather than a cash subsidy. SAIT CEO, Stiaan Klue, warned against red tape bogging companies down from accessing the subsidy.
THE South African Institute of Tax Practitioners late last year submitted a proposal to Treasury that recommends the relaxation of the strict learnership tax incentive allowance in the Income Tax Act to promote skills development through internships, writes Amanda Visser.
The head of tax policy and research at the institute, Sharon Smulders, said last week this would ensure the wage subsidy was linked to a tax incentive rather than a cash subsidy, thereby securing tangible and lasting learning outcomes.
The youth wage subsidy has been a bone of contention since Finance Minister Pravin Gordhan first announced it in 2010, with the Congress of South African Trade Unions being its major critic arguing it could encourage companies to replace older permanent workers with cheaper and younger ones.
President Jacob Zuma said in his state of the nation address last week that the subsidy would go ahead and an accord would be signed by the government, business and labour later this month.
Ms Smulders said South Africa was in dire need of skilled labour. "The wage subsidy should be linked to the transfer of skills and hence be outcomes driven,” she said.
Stiaan Klue, CEO of the institute, warned against red tape bogging companies down from accessing the subsidy once it was introduced.
Overly burdensome anti-avoidance measures would render the concept meaningless. The benefits of a subsidy should not be overshadowed by an onerous administrative burden, he said.