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SMMEs cutoff from skills development?   Article Date :4 Jul 2005 Changes to the Skills Development Levy Act Changes to the Skills Development Levy Act were introduced by the Minister of Finance in his budget speech in February 2005. They were foreshadowed by comments from President Thabo Mbeki earlier that month, when he put the issue of small business development at the top of the agenda. The argument was that small and medium sized businesses in South Africa spent 33 days per year complying with legislation – against only 18 days in other countries. One step taken to reduce this admin burden was to raise the Skills Development Levy (SDL) threshold, under which companies do not have to pay the monthly charge. From 1st August 2005 companies with an annual payroll of less than R500 000 will not have to pay the Skills Development Levy. Another change to the legislation is to remove the link to PAYE tax. Previously the threshold was only accessible by companies that did not also have any employees paying PAYE. With the inclusion of directors and members in PAYE payments, the number of companies eligible for the exemption was small. Addressing a stakeholder meeting, Services Seta Sector Skills Planning and Research Manager Devan Naicker was able to add some additional clarification that he had received from the SA Revenue Service. According to SARS, companies that fall under the threshold will not be able to pay SDL – even if they want to. The raising of the threshold from R250 000 to half a million per year, coupled with the removal of the PAYE link, will see significant numbers of small employers fall out of the SDL net. Naicker believes that the Treasury has underestimated how many. While conventional thinking is that SMMEs will be happy with the move, some vocal Seta-supporters are worried about what they will be missing. At the Services Seta stakeholder meeting frustrated SDFs from small businesses were angry about what they believed to be their exclusion Seta projects. The vocal minority are concerned that small companies will no longer be able to access learnership grants or the tax incentive attached to them. Other concerns are that small companies that are involved with training won’t use accredited providers. The Services Seta will be significantly impacted by the new rules. Their levy-paying members will fall from 97 000 to only 7 000. They have implemented internal changes to meet the new challenges including cutting the number of chambers down to five and moving all staff into only office building. Alan Hammond (Publishing Editor – Skills portal) Extracted from email newsletter by Deborah Machard & Associates (PTY) Ltd, free monthly e-zine for international business and development professionals. To subscribe email: newsletter@dmachard.com Contact Details: Mobile: +27(0) 82-771-3716 Email: enquiry@dmachard.com CLICK HERE TO RETURN TO THE MAIN NEWS PAGE