Introduction

The Skills Development Act, 97 of 1998 and the Skills Development Levies Act, 9 of 1999 ["Acts"] impose obligations on dentists as employers. Members are urged to take due cognisance of their duties in terms of the Acts mentioned.

The Acts were introduced and designed to provide training of unskilled labour force and encourage employers to use the workplace as active learning environment. The training will be funded by grants from Government and a levy on the employers’ payroll.

The Skills Development Act came into operation on 2 February 1999. The Skills Development Levies Act came into operation on 1 September 1999 and establishes the payment of a compulsory levy. The levy will be payable by dentists as employers with effect 1 April 2000.

The Acts establishes the National Skills Authority [NSA] and replaces the National Training Board. The NSA will regulate the SETAs. It also establishes Sector Education and Training Authorities [SETAs], which is being set up for different sectors of the economy. The SETAs will determine the education and training needs of the employers and employees using similar materials, technology, products or services.

Employers will be required to register with the SETA that most closely associated with their core business, for the purpose of co-ordinating skills development, for paying levies and for claiming rebates.

SETA 11, which is the Health and Welfare SETA, can be regarded as most closely be associated with the core business of dentists. In fact Code 9312 A and 9312B caters for Public Sector and Private Sector dentists respectively.

The South African Revenue Service [SARS] is responsible for the collection and administration of the levy.

General
Registration Procedures

The SARS has posted the application forms for registration [SDL101] forms together with guidelines [SDL10] to all employers on 7 February 2000 and the Application forms must be submitted to SARS by 3 March 2000.

All employers must register even those that have been exempted in terms of the Acts to pay a levy by the above date.

Members who have not received their forms are urged to obtain them from their local Revenue offices.

What is the Skills Development Levy?

It is the levy payable by employers and calculated at the percentage [mentioned below] of the leviable amount.

What is the leviable amount?

The total amount of remuneration paid or payable by the employer to the employee during any month as determined for purposes of establishing the employees tax.

Remuneration paid to employees below the income tax threshold [i.e where no PAYE is deducted] must be incorporated into the remuneration when determining what is the leviable amount.

The amount of remuneration paid/payable when determining the leviable amount excludes:-

• An amount paid to a labour broker [persons who for reward provides a client with other persons to do the work] and to whom a certificate of exemption has been furnished by the SARS;
• An amount paid/payable to a person by way of pension, superannuation allowance or retiring allowance;
• Annuity payments, lump sum payments from employers upon retrenchment, lump sum payment from pension, provident and retirement funds;
• Amounts payable to a learner in terms of a contract of employment.

Your accountants will be more qualified to assist you in calculating the leviable amount.

What is Remuneration?

Any amount of income which is paid or payable to any person whether in cash or otherwise for services rendered. Examples are salary, remuneration for overtime, fees, leave gratuity, bonus, emolument, allowances, wage, commission etc [please consult the SARS guidelines for further examples].

There are some payments excluded such as amounts paid to directors of a private company for services rendered, independent contractors, amounts paid to employees to reimburse them for expenses incurred etc [please consult the SARS guidelines for further examples].

Members must note that the levy cannot be deducted from the remuneration of an employee.

Which Employers are Exempt from paying the Levy?

The Acts provides that certain employers are exempted from the payment of a levy. As mentioned though they are exempted from payment these employers must still register with SARS.

The employers who are exempted are:-

• Any public service employer in the national or provincial sphere of Government;
• Any national or provincial entity if 80% of more of its expenses are paid from funds voted by Parliament;
• Any religious or charitable institution exempted from payment of income tax.
• Any municipality in possession of a certificate of exemption issued by the Minister of Labour;

Any employer believes on reasonable grounds that the total leviable amount paid or payable to employees during the following 12 months [from 1 April 2000] will not exceed R250 000,00 and the employer is not required to register as an employer in terms of the Income Tax Act [Thus all members registered with SARS for PAYE OR having an annual payroll in excess of R250 000,00 must register].

What is the prescribed percentage payable?

0.5% of the leviable amount for the period 1 April 2000 to 31 March 2001.

1.0% of the leviable amount from 1 April 2001.

When must the Levy be paid?

The first monthly return [SDL201] for April 2000 must be paid for the first month on or before 5 May 2000.

The levy must be paid over to SARS or SETA [see later] whichever is applicable with whom the employer is registered not later than 7 [seven] days after the end of the month in respect of which the levy is payable on form SDL201.

Where the seventh day falls on a Saturday, Sunday or a Public Holiday it must be paid on the last business day falling prior to such Saturday, Sunday or a Public Holiday.

Non receipt or late receipt of the SDL 201 will not be accepted as an excuse for late payment of the levy.

Penalties and Interest

If the levy is not paid on due date interest will be charged as provided for in the Income Tax Act plus a penalty equal to 10% of such outstanding amount will be imposed.

Miscellaneous

1. The levy paid by an employer is allowable as a tax deduction in terms of s 11 [a] of the Income Tax Act.
2. The levy payable will not attract VAT.
3. Any overpayment of a levy can be recouped from the SARS by a written request.
4. If employers experience cash flow problems this will not exempt them from the liability for payment of the levy. The Skills Development Act creates a statutory offence and proceedings will be instituted against them.

What is a SETA?

As stated above a SETA will be established for any economic sector. It will attend to the education and training needs amongst others of employers and employees who are engaged in using similar products, technologies, processes and materials and provide similar services.

The SETA will consist of members representing organised labour, employers including small business, government departments and if the Minister in consultation with the SETA agrees any professional body like SADA.

How will SETAs operate and be financed?

The SETA has its own constitution and is financed by skills development levies collected in its sector, investments, grants, donations, income from investments and income from services rendered, money from the NSF and income from any source etc

Employers falling within jurisdiction of more than one SETA

In such a case the employer must select one SETA taking into account composition of the workforce, amounts of remuneration payable to different categories of employers and their training needs.

Registration with a SETA

The employer must apply to the SETA in a manner required by it for the purposes of payment of the levy.

The employer must then within 21 days submit a statement to the Commissioner of SARS confirming that it falls within the jurisdiction of that SETA and that payment of the levy will be made to that SETA.

Recovery of Levy by SETA

A levy payable by an employer is a debt due to the SETA and where employers fail to submit a levy, the SETA may issue an assessment for the outstanding amount.

The SETA may also recover the outstanding amount by action in the Magistrate’s Court.

Inspectors may also enter workplaces without a warrant or any other place where the employer carries on business or keeps the record to monitor and ensure compliance with the Acts.

Inspectors may also enter the home of the employer with the consent of the owner or occupier of if authorised by a warrant.

How will the levy collected be distributed within the SETA?

In year one levies collected will be used as follows:-
Levy Transfer to NSF [prescribed] 20% of levy payment
Administration and operational costs [maximum] 20% of levy payment
Exceptional SETA costs [maximum – one year] 10% of levy payment
Grants to Employers [minimum] 50% of levy payment.
The Minister may alter the percentages in year two i.e. 1 April 2000.

Access by Employers of Levy Payment from SETAs

As an interim measure for year one, employers will be able to access a percentage of the levy payment by four grants.

The minimum amount available to employers is 50% of their levy payment.

Before the employer can seek recovery against the levy, the employer must satisfy the following conditions:

• Must have registered with SARS;
• Must have paid the levies directly to SARS or the SETA;
• Must be up to date with levy payments.

Grants to Employers for the year 1 April 2000 to 31 March 2001

In year one the employer can recover a minimum of 50% of the total levy payment by complying with the following conditions.

Grant "A" – 15%

An employer can recover 15% of the total levy payment for the employment of a Skills Development Facilitator.

The Facilitator will ensure that the employer complies with the Skills Development Act.

Employers with less than 50 employees and having a sales turnover of less than R5 million which applies to Community, Special and Personal Services as stated in the Employment Equity Act may jointly appoint a Skills Development Facilitator to handle all skills development activities

The facilitator must be registered with the SETA by 15 May 2000.

Who can serve as a Skills Development Facilitator?

An employer must have a nominated skills development facilitator, who is:

• An employee; or
• A formally contracted, external person;
• A person who is jointly employed by this employer and a number of other employers to assess the skills development needs of the group of employers and the employees concerned.

What will the Skills Development Facilitator do?

The Facilitator will assist the employers and employees in the development of a Workplace Skills Plan.

To serve as a contact person between the employer and the relevant SETA.

To advise employers about the implementation of a Workplace Skills Plan, drafting annual training reports and determine quality assurance requirement set down by the SETA.

Grant "B" – 10%

An employer who is approved for Grant A can recover 10% of the total levy payment by the employer for preparing and submitting a Workplace Skills Plan for the year 1 April 2000 to 31 March 2001.

Employers must complete and return the Plan according to the timetables set down by the SETA.

Grant "C" – 20%

An employer who is approved for Grant "A" and Grant "B" can claim a further 20% of the total levy payment for the implementation of the Workplace Skills Plan submitted for Grant "B".

The employee seeking this grant must submit an acceptable report accompanied by appropriate training records by the date required by the SETA.

Grant "D" – 5%

Each SETA will make available grants of 5% of the total levy payment as a Grant "D". These grants will be for specific skills shortages in its sector and to implement recommendations of the NSA.

Each SETA will recommend a list of skills shortages that merit grants under Grant "D". The grant will be paid on the basis of outcomes achieved.

The SETA is required to submit its criteria for making Grant "D" allocations to the Department of Labour by no later than 31 March 2000.