Is it worth claiming your SDL tax grants?

Is it worth claiming your SDL tax grants?

Is it worth claiming your SDL tax grants?

Is it worth claiming your SDL tax grants?

If an organisation has a payroll of more than R500’000 per year it may claim back SDL tax in terms of the Skills Development Levies Act. Many organisations don’t participate in skills development for various reasons; however, the grants available to organisations who do participate are quite substantial.

One thing not many people realise is, when is it actually worth claiming skills tax, when does the cost of compliance outweigh the benefit. As a rule of thumb we have been working on the premise that when your payroll is less than R500’000 per month the cost of claiming is about equal to the benefit, the reason for this is the sheer number of manhours involved to compile, complete the reports and submit a claim to comply with the act.

To see if it will be worth your while to participate in learnership claims calculate the following;

Total yearly payroll X 0.20% = SDL Tax, that you may claim back, plus R150’000 per Learner per annum

In addition, you may also claim Learnership Grants for all your clerks, apprentices and learners of up to R150’000 per person. If it is worth your while and you get more benefits than costs then, by all means, go ahead. BUT with the current regulations of the SETA and the loopholes they created for themselves rather obtain the services of a consulting SDF.

The SDF must :

✓ Complete and submit all your SETA documentation for internal training in respect of which to claim Training Grants.

✓ Complete your Annual Training Report and submit it to the SETA.

✓ Advise you on any of your training reimbursements and Grants

✓ Facilitate all your training and skills requirements.

✓ Create the Portfolio of Evidence required for Training Claims.

✓ Advise you on any Training and Educational matters and how it will impact on your business.

✓ Initiate and claim Apprentice, Internship or Learnership grants

Accreditation and Approval

SDFs have been implementing and managing skills development and employment equity on behalf of their client for more than 20 years and have a vast amount of experience in such matters. They must also be an accredited skills development facilitator and developmental specialist with all SETA’ to act in all industries.

Collect all SETA and Department of Labour required Documentation

This includes the EMP 501 document for the last 12 months, banking details as well as all training records and attendance registers, SDF appointments and other required documents.

This information is submitted to the SETA and the organisation is “activated” at the SETA. Copies of all relevant communications and information requests are sent to the SDFs.

A complete breakdown of all grant payments from SETA and SARS are obtained for reconciliation and verification by the organisation.

Establish Baseline

Upon completion of the SETA activation process a complete Skills Development analysis is conducted, to identify the elements in place at the organisation and give priority and direction to the implementation of priorities identified.

During this process, SDFs follow the guidelines of the SETA. This very important step ensures that all areas of concern are highlighted and addressed.

Training Committee

During the establishment of a baseline, the SDF initiates the establishment of an organisation training committee and workplace forum, if required.

A detailed report is generated and presented to management and training committee for assessment, input and budgeting purposes.

Skills Matrix and Gap Analysis

On conclusion of the skills audit and employee gap analysis, an individual development pathway is generated for all employees measured against the skills matrix and their skills gap analysis. During this analysis, the BEE requirements of the organisation are carefully considered in included in the training and development pathways for employees.


After employees are consulted, all employees are classified according to the new skills development Organising Framework for Occupations, and the occupation-based learning system is discussed in detail with management and the training committee, information of the new system is then disseminated to all employees of the organisation.

Training Objectives

All training objectives and deliverables are discussed with the organisation’s reason for Skills Development, Employment Equity and Broad-Based Black Economic Empowerment compliance.


On finalisation of the checklist the organisation skills development delivery is initiated and the quality management system is put in place with all relevant policies and procedures.

Selected employees are informed of their respective training and development pathways and programs. The employees earmarked for development are inducted into the process and work back agreements discussed in detail.

Training providers

All training providers that will be utilised for development are assessed against SAQA requirements and consideration is also given to the organisations’ procurement policies for the purposes of Broad-Based Black Economic Empowerment spending.

Portfolio of Evidence

All proof of implemented internal and external training is collected, recorded and verified prior to storage. Deviations from the checklist are recorded, discussed and appropriated at management and training committee meetings.

Managed process

On completion of a training intervention, the employee development path is updated and the employee development pathway adjusted taking into consideration affecting factors and the skills required. This process is managed and verified on a continuous basis and the organisational record system is audited every 6 months to verify compliance.


On completion of all training interventions planned for the period, the workplace skills plan and annual training report is presented to both the training committee and management on all training implemented and return on investment on the training.

During this meeting, the training committee and management approve the training implemented and the training planned for the next 12 months based on the skills audit completed during the year and the required development pathway and fast track development of earmarked employees.

Submission of Reports

On approval of the Workplace Skills Plan and Annual Training Report, the reports are submitted with proof of expenditure and application for discretionary grants.

All evidentiary proof is submitted to the SETA for audit and payment purposes.

Copies of this are also submitted to the Broad-Based Black Economic Empowerment verification agent allowing adjustment of the company Broad-Based Black Economic Empowerment rating score.

Apprenticeships, Learnerships and Internships.

On completion of the WSP and ATR submission, the organisation may employ an apprentice or start a Learnership. This process entails several steps and involves the training of mentors in the organisation, implementing logistical and administrative structures and approving training policies, procedures and budgets.  

In order to establish an Apprenticeship, Learnership or Internship the workplace must comply with the following.

1. A workplace that is capable of providing training, i.e infrastructure, tools, environment and equipment.

2. A qualified and accredited Mentor that will act as mentor and coach;

3. A suitably accredited qualified candidate to complete the training qualification.

4. A Skills Development Facilitator and system to keep a record of the apprenticeship.

5. SETA registration, accreditation and approval by the CLO

6. Compliance with the SDA, EEA and LRA.

SARS Tax rebates and Incentives

In terms of section 1.8 Taxation Law Amendment Bill 2010, Revision of The Learnership Allowance Incentive [Applicable provisions: “registered Learnership agreement” definition in section 12H(1), 12H(2)(b) and 12H(6)]

The Income Tax Act contains an incentive for employers that conclude Learnership agreements with their employees. Under this Learnership incentive, employers may claim a deduction in addition to the standard deduction for salary and associated employee costs.

This additional deduction seeks to incentivise employers so as to facilitate training and skills development (typically involving new or early entrants to the formal employment sector). To qualify for the Learnership incentive, an employer must register the Learnership with the applicable sector education and training authority.

The incentive contains two benefits.

  1. The Learnership generates an R30’000 additional allowance for an employer while the agreement is in force.

  2. An employer obtains another R30’000 additional deduction upon the learner’s successful completion.”

The amendments will be effective for Learnership agreements that are concluded on or after 1 January in respect of years of assessment commencing on or after that date. Going forward a Learnership is deemed registered throughout the period of the agreement during the employer’s year of assessment if registered within six months after that year of assessment.

SETA Discretionary Grants

The Discretionary Grant is a grant made to support company, training programmes in accordance with legislation, Skills Development Levies Act no 9 of 1999 and funding regulations. A discretionary grant is a grant approved to applicants at the SOLE discretion of the SETA governing board, taking into account scarce and critical skills within the SETA.

Discretionary Grants may be retracted at any time if the Organisation does not comply with or changed the conditions of the Learning Program. Discretionary Grant is ONLY paid to the following organisations and has met the following criteria:

  • Are up to date with SDL levy payments (where applicable).

  • Have submitted WSP/ATR’s and received Mandatory Grants payments for the last three years (if applicable).

  • Have an average pass rate of 65% in the implementation of learning programmes including apprenticeships.

  • Must comply with the SLA, Star 1 and SDA.

  • Have a training committee in place if they employ more than 50 employees.

  • Have a progression or placement average of more than 50%.

Discretionary Grant payments are made in 4 tranches in line with the MoA/SLA and progress made by learners in their specific learning interventions. Trance payment amount differs, depending on the funding window and learning area. Tranche payment is triggered by the achievement of the set milestones by learners.

Unfunded Learning Interventions

Where the organisation does not meet the SETA requirements or require the entire training spend for B-BBEE purposes they may choose to proceed with the apprenticeship or Learnership as an unfunded intervention.

This means that the intervention can still be registered with the SETA, as a normal intervention but the organisation will be solely responsible for the entire training cost. They will also not receive any cash Discretionary grants from the SETA but they can still claim the SARS tax rebate if the learner was unemployed.


Stephan du Toit

Stephan du Toit

Senior Advisor Employment Equity. Specialist in emergency Employment Equity and Labour compliance for organisations. Find more information on implementing employment equity in my other articles or visit our website to enroll for the next employment equity training course.

Are you having difficulty with employment equity? Please don't hesitate to contact me.

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