As an employer, you have a number of obligations and responsibilities as regards the management of your staff. Some of these are internal to your business, whereas others are legal requirements that you need to comply with.
One of these legal requirements is the payment of Skills Development Levy (SDL) to SARS, and if your annual salary bill is R500 000 or higher then it applies to you.
The SDL is not just another tax that the government is levying on employers. The intention is for employers to implement a programme of accredited training courses for their staff, to build skills within their sector. Employers who participate and embrace the system are rewarded with a partial refund. It is therefore advisable for employers to understand how it works so that they can implement a meaningful training system that benefits the employee, the employer, the industry and society in general.
So how does it work?
There are certain items that are exempted from the levy, and it is advisable for you to be aware of what they are so that you only pay the required Leviable Amount.
The Skills Development Levy must be paid monthly and is currently set at 1% of your payroll. It is calculated as follows:
Step 1: Determine your total remuneration/payroll amount for the year
[Section 3(4) of the SDL Act].
Step 2: Subtract the SDL exclusions
[Section 3(5) of the SDL Act].
Step 3: Subtract the allowable deductions
The balance of remuneration after the deduction of all allowable deductions i.e. pension fund contributions, RAF contributions, income protection policy premiums, donations and medical scheme contributions (for persons 65 and above). [Paragraph 2(4) of the Fourth Schedule].
It is possible for an employer who pays SDL to get up to 45% of the total levies paid back from SARS. In order to do so, the employer must:
1. Register a Skills Development Facilitator (SDF)
2. Submit an Annual Training Report (ATR)
3. Submit a Workplace Skills Plan (WSP)
The ATR and WSP must be submitted to the Sector Education Training Authority (SETA) where the employer is registered. An employer is not forced to submit these items, but will not be eligible for a refund if they do not do this. Likewise, the refund will only be granted if the employer is in fact spending the money on training and skills development.
There are 27 SETAs, classified according to economic sectors. To establish which SETA your industry belongs to phone SARS on their Contact Centre 0800 00 SARS (7277) and they will advise you. It can only be the person registered with SARS as the company contact to whom they will give this information.
The submission deadline for the ATR and WSP is the 30 April of each year!
Each SETA provides a guide and format to report on the training that has taken place. Use their format to make the processing easier and quicker.
Some employers have implemented Pivotal Programmes. This refers to professional, vocational, technical and academic learning programmes that result in occupational qualifications. They may include a knowledge component that is normally delivered at an external training college for further education or a university, as well as structured learning in an accredited training facility. These Pivotal Programmes can be included in the report.
Keep a schedule of all your training activities up to date on a monthly basis. This will enable you to load it into the format required by your SETA. This, in turn, will make it easier for the SETA to approve your training report and any related refunds.
We have developed a spreadsheet that will make the monthly monitoring easier for you, regardless of which SETA you report to. You can download the document here:
Download the Document
Most SETAs require online submission, making it easier for them and the employer to effectively participate in the system.
The Skills Development Facilitator (SDF) must be registered on the SETA’s website in advance, and it is the SDF’s responsibility to submit the reports. Do not leave the registration of your SDF to the last moment, as some SETAs can take a few days to authorise the access.
Often the most difficult part is to understand the OFO Codes assigned to each position title. This refers to Organised Framework for Occupations which is a skills-based, coded classification system. One of the best descriptions to understand these is from the Food and Beverage Seta, and you can view this outline by clicking on the link below:
Compliance can often present some unforeseen challenges and frustrations. If you require any assistance with your ATR and WSP submission or you would like us to do this for you, please make contact with us and we will do our best to assist you.
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