After the recent extension of the Section12H learnership tax allowances in the 2024 Budget Speech, it has become important to understand the quantum and eligibility of these allowances and how it impacts on the training landscape. In a nutshell, Section 12H provides deductions to employers for learners participating in registered, accredited learnership projects. These deductions are intended as an incentive for employers to encourage skills development and job creation. The deductions consist of an annual allowance and a completion allowance.
Annual Allowance:
It is important to note that an Employer will only qualify for the annual allowance if –
- during any year of assessment the learner is a party to a registered learnership agreement with the employer;
- the learner holds an NQF-level qualification from 1 to 10;
- the agreement was entered into pursuant to a trade carried on by that employer; and
- the employer has derived “income” as defined in section 1(1) from that trade.
The quantum of the annual allowance depends on the NQF level of the learner/qualification and the disability status of the learner, as per below table:
| NQF Level of leaner | Learner with no disability | Learner with disability |
| 1 – 6 | R40 000 | R60 000 |
| 7 – 10 | R20 000 | R50 000 |
NB: The annual allowance is always pro-rated for the period that the learner is active within the financial year of assessment, i.e. if the financial year for Company X runs from 01 March – 28 February and the learner is active from 01 August – 31 July, a pro-rated 6 months allowance will be claimed, e.g. R40,000.00 / 12 months x 6 months = R20,000.00 in the case of an able-bodied learner. Similarly if a learner drops off the learnership in month 4, the Employer will count the pro-rated 3 months, e.g. R40,000.00 / 12 months * 3 months = R10,000.00
Completion Allowance:
The employer will qualify for the completion allowance only if –
- during any year of assessment the learner is a party to a registered learnership agreement with the employer;
- the learner successfully completed the learnership during the year of assessment; and
- the employer derived “income” as defined in section 1(1) from that trade.
The quantum of the completion allowance, similar to the annual allowance, depends on both the NQF level on the learner/qualification and the disability status of the learner:
| NQF Level of leaner | Learner with no disability | Learner with disability |
| 1 – 6 | R40 000 | R60 000 |
| 7 – 10 | R20 000 | R50 000 |
The completion allowance is not however pro-rated, and is instead a once-off deduction in the year of assessment that the learner successfully completes the learnership.
Deduction of calculated allowances:
The combined value of the annual and completion allowances are calculated at the end of the relevant year of assessment and is then deducted against income tax payable to SARS. It is imperative to note that this is a sensitive calculation as any errors or lack of supporting documentation submitted could lead to penalties.
Compass Consulting has assisted various employers, ranging from small scale companies implementing learnerships for the first time, to large scale companies submitting substantial amount of learnership allowances through S12H, to properly calculate and deduct S12H deductions to ensure compliance with all relevant requirements. Reach out to us for a no obligation assessment to see how Section 12H can benefit your business.
