South Africa


  • Service: Tax
  • Type: Business and industry issue
  • Date: 2011/09/12

Simplified learnership tax incentives to support job creation 

The Finance Minister, Pravin Gordhan, emphasised in the 2011 Budget speech that the Government’s aim is to put development first and not dependence on welfare – training our youth to become pioneers in industry will accelerate the creation of employment in the future.

In support of youth employment and to equip the unskilled workforce, Government is extending the learnership tax incentive allowance for a further five years. Since 2010, this section of tax law has undergone a revolutionary change – it simplified the process of claiming the allowance and is more easily understood by the employer.


For an employer to enjoy the benefit of the learnership tax incentive, they must be party to a registered learnership agreement. An employer must register the learnership agreement with the SETA (Sector Education and Training Authority). Employers who offer training contracts to unemployed learners need to sign a contract that complies with the Sectoral Determination for Learnerships with unemployed learners.


A learnership agreement can be registered where a learner has a contract of apprenticeship with a company for more than 12 months or where a learner is in training with a company which is registered in accordance with the Skills Development Act.


In each case, the agreement must be entered into for the purpose of allowing the learner to use the skills obtained in the employer’s trade.


At the start of a registered learnership agreement, employers will benefit as follows:


  • A commencement allowance, based on a 12-month period, of R30 000 in the year that the agreement is entered into (R50 000 for learners with disabilities).
  • For a period shorter than 12 full months, the commencement allowance will be limited to an amount of R2 500 multiplied by the number of full months that the learner is a party to that agreement. So if a learnership starts halfway through the employer’s year of assessment, half of the allowance is claimed by the employer in the first year and half in the second year.
  • On completion of a learnership and if the learnership is for a period shorter than 24 months, the employer is granted a completion allowance of R30 000 (R50 000 for learners with disabilities).
  • For a learnership that is for a period longer than 24 full months, in addition to the commencement allowance of R30 000 (R50 000 for learners with disabilities), the employer may claim a completion allowance of R30 000 (R50 000 for learners with disabilities) multiplied by the number of consecutive 12-month periods during which a learner is registered for a learnership linked to the employer's trade, ie R30 000 per year.


Although the employer will enjoy the benefits of this tax incentive, the main benefit is that the learner enjoys the opportunity to be educated and trained.

In the end, the learner will have the necessary skills to bring back to their place of work. Alternatively, they will have increased their chances of finding gainful employment.


This will definitely be a step in the right direction in promoting skills transfer and ensuring job creation.