Section 12H of the Income Tax Act 58 of 1962 (the Act) provides a tax allowance to employers for ‘registered learnership agreements’.
These agreements must −
- Be registered in terms of the Skills Development Act 1998, and
- Be entered into between an employer and a learner before 1 April 2027
This incentive is designed to promote skills development, particularly among employees lacking formal qualifications.
LEARNERSHIP ALLOWANCES UNDER SECTION 12H
Learnership agreements entered into on or after 1 October 2016 are governed by updated rules, targeting employees at higher risk of unemployment due to insufficient qualifications.
Annual allowance
Granted if the employer is a party to a registered learnership agreement:
- For the full year of assessment (section 12H(2)(a)):
- NQF Levels 1–6: R40 000
- NQF Levels 7–9: R20 000
- For part of the year (Section 12H(2)(b)):
The same allowance applies, but is prorated based on the number of full months the agreement was active:- NQF Levels 1–6: R40 000 × (full months/12)
- NQF Levels 7–9: R20 000 × (full months/12)
Completion allowance
Granted upon successful completion of the learnership:
- Agreement shorter than 24 months (section 12H(3)):
- NQF Levels 1–6: R40 000
- NQF Levels 7–9: R20 000
- Agreement of 24 months or more (Section 12H(4)):
- NQF Levels 1–6: R40 000 × number of 12-month periods
- NQF Levels 7–9: R20 000 × number of 12-month periods
LEARNERS WITH DISABILITIES
If the learner qualifies as a person with a disability (as defined in section 6B(1) of the Act) at the time the agreement is entered into, the annual and completion allowance is increased by:
- R20 000 for NQF Levels 1–6 (Total: R60 000)
- R30 000 for NQF Levels 7–9 (Total: R50 000)
Important considerations and tips
- No double deduction − Section 23B of the Act prohibits claiming a deduction or allowance under multiple provisions, except where explicitly allowed. Section 12H specifically permits claiming the allowance in addition to salary deductions under section 11(a).
- Timing of registration − If a learnership is registered within 12 months after the employer’s year-end, it is deemed registered on the date the agreement was signed.
- Further guidance − Refer to SARS Interpretation Note 20 (Issue 9) for more detailed interpretation of section 12H.Research − SAICA is also conducting a survey with the members to evaluate the impact of section 12H.
Author
Dr Muneer Hassan CA(SA)
Chartered Tax Advisor (CTA), Deputy HOD, Accountancy and Senior Lecturer in Taxation at UJ, Lecturer on the Gauteng Board Course and Deputy Chair of the SAICA National Tax Committee
