Changes to Employment Tax Incentive

Oct 14 2016
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Newsflash courtesy of SAPA

Changes to Employment Tax Incentive

Towards the end of September, National Treasury published a second batch of draft amendments to the Taxation Laws Amendment Bill (TLAB) for public comment. Included in the proposed changes are extensions to the Employment Tax Incentive (ETI) and the Learnership Tax Incentive, which are due to expire on the 31st December and 30th September 2016 respectively.

The proposal includes extending ETI for another 2 years, up to the end of February 2019. The amendment also proposes a cap of R20 million per employer per year in ETI claims, to “more effectively target the incentive towards those employers that are creating new jobs”.

Learnership Tax Incentive

The same draft amendments to TLAB propose extending the incentive from 1st October 2016 to 31st March 2022 (i.e. five years), and that the value of the incentive be increased to R40 000 per learner per annum for qualifications up to NQF level 6, and that the value for NQF level 7 or higher be reduced to R20 000.

Protests

At the moment, particularly in Gauteng, it feels as if everyone is protesting about something. Global Business Solutions had the following view on the Cosatu strikes which were held on 7th October:

“We have further investigated the issue of the COSATU stay away planned for 7 October 2016.

It would seem that a section 77 application had been made, but was based on public transport only. They revised the public transport application made last year and are basing the legitimacy of this stay away on that.

If one looks at their notice, public transport is not mentioned on their notice and therefore it would make this stay away technically unprotected. We highlight “technically unprotected” because to take decisive action on a technical mistake has never been viewed favourably by adjudication processes.

The bottom line is that the stay away will at the moment and on the basis of their notice, be unprotected and the principle of no-work-no-pay and progressive discipline may apply.”

With thanks to Global Business Solutions

Garnishee Orders: A 7-point Practical Guide to New Rules for Lenders, Debtors and Employers

“… The law regulating the granting of emoluments attachment orders was misapplied and abused by the credit providers. This caused enormous hardship to individuals against whom those orders were issued” (extract from judgement below)

How does the Constitutional Court’s new ruling on garnishee orders (more properly referred to as EAOs or Emoluments Attachment Orders) affect you? Here is a practical summary of what the changes to the law mean to lenders, debtors and employers; at least until proposed new legislation (reportedly soon to be tabled in parliament) replaces them –

1. Who can issue EAOs? EAOs are court orders obliging a debtor’s employer to deduct amounts from his/her earnings and pay them over to the creditor. In the past, clerks of the court were able to issue them - a process which led to allegations of rubber-stamping in some local courts.

2. Judicial oversight: Now, a magistrate must decide whether or not to grant an EAO after considering two factors –
a. Is it “just and equitable” for an EAO to be granted?
b. Is the amount “appropriate?” The court will have to decide here what the debtor can afford to pay.

Note that existing requirements including a 10 day registered-post warning to pay the debt, and proof that the debtor consented in writing to the issue of an order, remain in place.

3. Which court? Where the NCA (National Credit Act) applies - which it will in most such cases - creditors can no longer choose courts far away from debtors. Only a court where the debtor lives or works will have jurisdiction, making it much easier for him/her to be heard in court.

4. Existing orders: The changes are not retrospective and apply only from 13 September 2016, the date of the judgment. Therefore existing EAOs are valid, and payments already made to creditors under them are not affected.

5. Lenders: Be even more careful than before when lending money to make sure that your debtors can pay you back. Incautious lenders will find that even loans not falling foul of the NCA’s reckless lending provisions will now be more difficult to recover.

6. Debtors: If you have an existing EAO against your salary or wages, you can still challenge it in court on an individual basis.

7. Employers: As said above, existing orders are still valid and must be complied with unless individually set aside – take advice in any doubt

With thanks to Noa Kinstler Attorneys & Conveyancer

SARS System Maintenance

Please note that the eFiling site will be down for maintenance today, Friday 14th October, from 18h00 to 21h30.