Skills development is a fundamental aspect of your B-BBEE scorecard and learnership programmes are what drives the country’s effort to increase skills within the workforce, subsequently reducing poverty and improving economic growth.
In an effort to encourage companies to offer Registered Learnership Agreements to individuals who qualify, the South African government has implemented a tax incentive for employers who engage in skills development activities.
This incentive is known as the S12H Learnership Allowance.
The Learnership Allowance serves as a tax incentive for employers who can claim it as an additional tax deduction from their trade income. The incentive became available to registered learnership agreements that were entered into as of the 1st of October 2001. Learnership agreements that were initiated between the 1st of October 2001 and the 1st of October 2016 fell under the previous S12H.
All learnership agreements entered into between the 1st of October 2016 and the 1st of April 2024 will fall under the new S12H which also has a sunset clause taking effect on the 1st of April 2024.
The main purpose of this tax incentive is to encourage companies to create new opportunities by upskilling employees. As a result, human capacity within the workforce is improved and newly learned skills and gained knowledge can be passed on to future generations. Ultimately, it aims to improve the economic status of the country.
Additionally, companies can benefit from the Learnership Allowance as it reduces their overall tax liability as well as improving their B-BBEE compliance.
The tax incentive includes both completion and annual allowances which are explained below.
Employers are entitled to a once-off completion allowance during any year of assessment where the learner completes the learnership successfully. The completion allowance is a once-off allowance which can be claimed in addition to the annual allowance.
Employers will qualify for completion allowance only if they meet the following requirements:
In order to successfully claim the completion allowance, the employer must provide SARS with sufficient proof that the learner has successfully completed the learnership agreement. Additionally, SARS also requires confirmation from the relevant Sector Education and Training Authority (SETA).
The completion learnership allowance is calculated as follows:
NQF Level of Learner
Learner with Disability
Learner without Disability
The annual allowance is deductible in every year of assessment where the learnership agreement is still active and in place. However, it’s important to note that the allowance will be apportioned should the learnership agreement commence or end partway through the year of assessment. In such cases, a pro rata portion will be calculated.
Employers will only qualify for the annual allowance if they meet the following requirements:
The annual learnership allowance is calculated as follows:
According to the Income Tax Act, employers do not qualify to claim for the learnership allowance if:
Should a learnership agreement be terminated by either party, the employer will qualify to deduct an amount which equals the pro rata portion of the annual allowance in that specific year.
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