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Skills development is crucial for global employment, enhancing productivity, private sector growth, job creation, and poverty reduction. Diversifying the economy towards high-productivity sectors requires a skilled workforce to attract investment. Skill acquisition occurs through formal, informal, and non-formal learning, fostering adaptability to evolving markets. Establishing lifelong learning systems and supportive environments is essential.  


A company or individual who contributes to the payment of training or an apprenticeship would be entitled to the benefits set out below - for any employee registered in a learnership agreement. 

This would be an agreement registered with SETA (Skills Education Training Authorities) in accordance with the Skills Development Act.  


The Services SETA offers various learning programs for both unemployed and employed individuals. Employers benefit significantly from participating in skills development, leading to increased productivity, contribution to economic growth, and access to incentives such as tax rebates and improved BBBEE scores, especially for training unemployed and disabled individuals. 


The Skills Development Act, enacted in 1998, aims to fulfil the country's objectives of reducing poverty, and unemployment, and enhancing economic growth through skills development. The Act facilitates the National Skills Development Strategy by establishing a framework for workplace training and development, including the registration of learnerships by various SETAs.  


Incentives, such as tax breaks, were introduced to encourage job creation, skills development, and human capacity enhancement. These incentives were extended over time and tailored to support specific groups, such as disabled individuals. The tax relief is granted to employers who enter registered learnership agreements, including both new hires and existing employees, with greater deductions for agreements involving new hires. Special provisions were also introduced for longer-term apprenticeships to ensure the effectiveness of the incentive. 


In certain circumstances where a learnership agreement is terminated before its completion, the amount that was previously allowed as a learnership allowance may be recouped.


 The Learnership Allowance: 

Employers can qualify for a learnership allowance deduction if they meet certain requirements: 

Learnership Agreement: 

Employers must have entered into or completed a learnership agreement during the assessment year. This includes agreements completed within the same year they were entered into. 

Registered Agreement: 

The learnership agreement must be registered with a SETA or constitute a registered contract of apprenticeship. Unregistered agreements do not qualify. 


Agreements must be entered into between October 1, 2001, and October 1, 2011, to qualify for the allowance. Completion after October 1, 2011, still qualifies for the allowance. 

Original Employer: 

The employer identified in the agreement as the lead employer qualifies for the allowance. Substituting employers, except within a group of companies, do not qualify. 

No Replacement: 

A learnership agreement cannot be replaced by another for the same learner to claim additional allowances. 


The amount deductible depends on factors such as the duration of the agreement, remuneration, whether the learner was an existing or new employee and disability status. The maximum deductions vary based on the timing of the agreement and the disability status of the learner. 

Employers must complete a standard form (IT 180) for each agreement claimed and retain it for auditing purposes. 


Upon completion, the deductible amount considers the duration of the agreement and remuneration, subject to maximum limits based on timing and disability status. 

For contracts of apprenticeship entered into after January 1, 2009, deductions upon completion consider the training period and the annual equivalent of remuneration, also subject to maximum limits. 



Employer A is a company with a December year-end. 



Date Entered 


Successful completion date 


1 May 2016 

30 months 

31 October 2018 


1 October 2016 

18 months 

30 March 2018 


1 November 2016 

24 months 

31 October 2018 

All learners have no disabilities.  

Year-ended December 2016 

Julie's annual allowance: R 30 000 X 8/12 months = R20 000 

Michael's annual allowance: R 40 000 X 3/12 months = R10 000 

Sipho's annual allowance: R 20 000 X 2/12 months = R3 333  

Total Section 12H allowance for Employer A = R33 333  

Year-ended 31 December 2017 

Julie's annual allowance: R 30 000 X 12/12 months = R30 000 

Michael's annual allowance: R 40 000 X 12/12 months = R40 000 

Sipho's annual allowance: R 20 000 X 12/12 months = R20 000  

Total Section 12H allowance for Employer A = R90 000  

Year-ended 31 December 2018 

Julie's annual allowance: R 30 000 X 10/12 months = R25 000 

Julie completion allowance: R30 000 X 2 consecutive 12-month period = R60 000 

Michael's annual allowance: R 40 000 X 3/12 months = R10 000 

Michael completion allowance: R40 000 x 1 full 12-month period = R40 000 

Sipho's annual allowance: R 20 000 X 10/12 months = R16 667 

Sipho completion allowance: R20 000 X 2 consecutive 12-month period = R40 000  

Total Section 12 H allowance for Employer A = R191 667 

Another way an Establishment can recover some funds invested in employees is with -

Employment Tax Incentive (ETI): 


ETI is a tax concession made to encourage employers to hire young people with no work experience. ETI is available to all employers who are registered for PAYE and have all tax affairs in order. ETI was implemented with effect from 1 January 2014 and will end on 28 February 2029. 


The ETI calculations are as follows: 

  1. ETI per month during the first 12 months of employment of the qualifying employee is R1000. 

  2. ETI per month during the second 12 months of employment of the qualifying employee is R500. 


In summary, investing in employee training and development is crucial for business growth. Tax Deduction offers financial relief to companies and individuals involved in registered learnership agreements. This includes both an annual and completion allowance, with higher benefits for disabled learners.  

Additionally, the Employment Tax Incentive (ETI) supports employers in hiring young, inexperienced individuals. These measures aim to encourage workforce development while providing financial incentives for businesses.



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