Liable for paying SDL to SARS?
The Skills Development Levy (SDL) is a company contribution that companies pay every month. This levy funds education and training through the Skills Education Training Authorities (SETAs). Read on to discover if you’re liable for SDL so you can avoid SARS penalties.
It’s important that you comply with the Income Tax Act when it comes to SDL. But to do this you have to know whether or not you’re liable for SDL?
So who is liable for SDL?
If you have one or more employees, you’re liable and you MUST register for SDL.
When must I register for SDL?
You must register for SDL when you register for employees’ tax and Unemployment Insurance Fund (UIF). The application form to register for SDL is the same form you use to register for employee’s tax (i.e. the EMP101).
One word of caution: “When you register for employees’ tax and SDL, you must be careful when you select your Standard Industrial Classification (SIC) and SETA codes”.
These codes show what industry sector you operate in. If you select the wrong industry sector, you can’t claim back your SDL for training you’ve provided to your staff. You can get a full list of the SDL SETA and SIC codes from the SARS website (www.sars.gov.za).
Please note: if your annual payroll is R500 000 or less you’re exempt from paying SDL. There are also a few other specific business types that are exempt.
Here are the three employers that are exempt from SDL
· Public service employer i.e. national of provincial government;
· Public benefit organisation that’s involved in welfare, humanitarian, health care or religious activities (churches); and
· Any municipality.
So how do you calculate your SDL contributions?
The levy is currently 1% of the leviable amount per month. The leviable amount is the total amount of remuneration, paid or payable, or deemed to be paid or payable, to your employees during a particular month for employees’ tax purposes, whether or not you’re liable to deduct or withhold employees’ tax. Don’t make the same mistake of excluding CC members and directors from the levy, they qualify as well.
How to declare and pay your SDL to SARS
You must declare your SDL to SARS on the monthly return for employees’ tax (EMP201). Remember, non-compliance with the Income Tax Act will expose your business to a full employees’ tax audit from SARS. Now that you know who is liable for SDL, make sure you comply.
What happened to the Skills Development Levy (SDL) your company paid to SARS?
Once the Skills Development Levy has been paid to SARS, your organisation has for all intends purposes paid TAX and what happens with this Tax (levy)? Don’t despair, this does not mean your company have yet again paid money into a big black hole, never to be seen again ….
The Skills Development Levy is there to ensure that employees within an organisation receives industry related training and skills which not only benefits them but also your company and the industry you operate in as a whole. In a nutshell, your company has put away some of the money it requires to train your staff for the next year.
One word of caution: “When you register for employees’ tax and SDL, you must be careful when you select your Standard Industrial Classification (SIC) and SETA codes”. Ensure that you choose the SIC Code that is relevant to your core business, i.e. what is responsible for the generation of 70 – 80% of your company’s revenue? Only one SIC Code must be selected, taking the following into consideration:
Composition of the workforce.
Amount of remuneration paid or payable to the different categories of employees.
Training needs of the different categories of employees.
Distribution of Skills Levies
Currently Skills Levies paid by SARS are transferred to the SETA you are registered with and distributed as follows:
What portion of the SDL are your company entitled to?
Eligible companies can now apply to the SETA receiving the SDL, to participate in the following:
Mandatory Grant of 20% of the SDL paid to SARS
Discretionary Grant of 49.5% of the SDL paid to SARS
What happens to the SDL if your company does not apply for the above grants?
If your organisation does not apply for these grants, you are in essence forfeiting it. The unallocated funds are transferred into the Discretionary Grant Fund to the benefit those companies who do apply for the grants, even after they already received the full 69.5% allocation. Effectively this means your company are funding the training of your competitors, allowing them to increase productivity, quality and service. Thereby gaining a competitive advantage, all at your company’s expense.
For example: The average small company pays approx. R3,000 per month to SARS, i.e. R36,000 per year. Your company will be entitled to apply for grants to the value of a minimum of R25,000. Most SETA’s will grant additional funds for learnerships. (For example: Wholesale and Retail pays up to R49,000 per learner per year. Merseta (manufacturing) up to R142,000 per apprenticeship, MICT (IT) up to R70,000 per learner per year, etc.)
Why would you want to place your company at a disadvantage when you can benefit from funds already budgeted and spent? It makes no business sence!
Over and above these grants, your company may benefit from Learnership Income Tax Rebates of up to R100,000 per learnership and a maximum of R1,000 per learner per month from Employment Tax Incentives (ETi) from your monthly payment to SARS, via the EMP201 submitted.
Join the skills revolution and not only grow your company and staff but also your community?
For further assistance, contact HR101 on [email protected] or Lucy Coleske on 081 342 1461
