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Claiming a learnership allowance where the employee leaves a month earlier than the SETA signs off?

Monday, 09 February 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: A client employs a person in terms of a 4 year learnership. This learnership is for the period 1 March 2011 to 28 February 2015. The learnership has specific requirements which are linked to that of the SETA requirements. Once the employee has met these requirements the employee can choose to leave the client's employment. In this case the person left at the end of January 2015 as his core training requirements were met. The SETA will issue the completion letter on 28 February 2015. Therefore technically the learnership is still effective until 28 February 2015. However there is no employment relationship for the month of February.

Would a company be able to claim the learnership allowance in full where the employee leaves a month earlier (i.e. 11 months) and the SETA only signs off the learnership at the end of the final month (12 months)?

A: In our view the requirement in section 12H (4) of the Income Tax Act, is that the 12 month period must be calculated from the date of commencement, which would coincide with employment. Section 17(2) of the Skills Development Act requires that the learnership agreement must oblige the employer to employ the employee and the employee to work for the employer. In our view both the employment and learnership agreement would terminate in January on resignation of the employee and the 12 months should be calculated as stated to this date and not to February which was the maximum conclusion date.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.



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