Fasset Update March 2013

1. Fasset Update March 2013

2. Seta Funding Regulations Fasset Update March 2013 • Overview of major changes • WSP submission will be due on 30 April (and not 30 June as with current) as from 2014 • Mandatory Grants (previously 50% of SDL) is now 20% • 80% of the Discretionary Grants funding will be allocated to PIVOTAL programmes • PIVOTAL is defined as professional, vocational, technical and academic learning programmes that result in qualifications or part-qualifications on the National Qualifications Framework • There is a new ‘minimum requirements’ Mandatory Grant form

3. Fasset’s Strategy 2013 / 2014 Fasset Update March 2013 • Fasset is focusing on new relationships in order to extend the skills development reach in implementing a career pipeline approach • Further Education Training (FET) Colleges • Universities • Addressing skills need in the public sector • Provincial footprint, focus on rural areas • A PIVOTAL Grant will be introduced for all races, however the transformation agenda will continue to be pursued through specific interventions such as SCG, Bridging Programmes, LCG, NLRG etc.

4. Mandatory Grant Fasset Update March 2013 • Training plan for the upcoming year and training report for the previous year • 20% of the SDL, paid quarterly • 2 forms: <50 Employees and >50 Employees (MS Excel format) • All training, including short courses, PIVOTAL programmes to be specified • No discretionary criteria e.g. any population group, gender etc... applies • Cost of training not linked to payout amount • Training committee recommended for employers employing 50 or more • Due 30 June 2013 – to be submitted via hand delivery on Friday • Will move to 30 April from 2014

5. Combined Pivotal and Strategic Cash Grant Fasset Update March 2013 • Now 50% of the SDL • 30% of grant may fund any learner on pivotal programme • 20% of grant to fund Black African learners and people with disabilities • Qualifications (degrees, diplomas), learnerships, internships – to be NQF-registered • Learners currently commencing, undergoing, or completing a pivotal programme in the 2013 calendar year • Tariffs are applicable • Due date 15 February 2014 – to be submitted via hand delivery on Friday

6. Learnership Cash Grant Fasset Update March 2013 • Entry Grant : On registration of Black African learners on learnerships • Exit Grant: On completion of Black African learners on learnerships • SDL payers and non-levy payers • Fasset learnership or specific other Seta learnership • 10 entry grants per employer • 10 exit grants per employer • Black African learners and learners with a disability • Higher amount for learners with a disability • Employers with staff complement under 150 • Due date 15 February 2014 – to be submitted via hand delivery on Friday

7. NSFAS Loan Repayment Grant Fasset Update March 2013 • Ensuring retention of learners on learnerships • 3 year learnership attracts R 60,000 grant towards NSFAS account • Transformation in the sector: Black African learners and people with disabilities • Learners currently commencing, undergoing, or completing a learnership in the 2013 calendar year with a Fasset employer • Employed learner or an employer representative may apply • Black African learners will be relieved of the NSFAS financial burden • Salary threshold applies • May be applied for in tranches • Due date 15 February 2014 – to be submitted via hand delivery on Friday

8. NSFAS Grant Amounts Fasset Update March 2013

9. Assessor and Moderator Grant Fasset Update March 2013 • To ensure the supply of assessors of academic and workplace training • Reimbursement of the cost of training • Maximum of R 4,500 • Assessor/moderator to be registered with Fasset in 2013 • Training can take place before 2013 • Due date 15 February 2014 – to be submitted via hand delivery on Friday

10. Lifelong Learning Fasset Update March 2013 Only firms with a valid SDL number with Fasset will be able to register for the events This calendar is subject to change

11. Innovations in accreditation Fasset Update March 2013 • Whole firm accreditation • To accredit non-credit bearing training • Firms that offer training that they would like recognised and accredited • Non-credit bearing training i.e. no assessment • Functions as Approved Provider accreditation i.e. not linked to unit standards • Internships • Internships that fall into the graduate work-based category • Companies apply for programme and site accreditation • May then apply for Fasset grants • Claim points of BEE scorecard

12. Bridging Programme: Access into Higher Education Fasset Update March 2013 • The funding window opens doors for learners to enter higher education. • Black African and all disabled learners • Learners lacking requisite entry requirements into a sector-specific higher education qualification • Incorrect subject choices or followed an unrelated discipline • 2nd chance learners • Complete programmes and meet entry requirements which allow them to enter sector-relevant higher education qualifications, for progression in the sector • Tuition fees, examination support courses and soft skills interventions

13. Bridging Programme: Academic/Professional Body Qualifications Fasset Update March 2013 • The funding window opens doors for learners to enter higher education. • Public providers and professional bodies to assist learners to obtain formal qualifications • Learners will be placed in learnerships, internships or full-time employment • Number of learners with scarce skills qualifications will increase • Employers will have access to increased numbers of employable learners • Broader economy will benefit with learners who have a cross-cutting skill that is needed to grow the whole economy

14. Bridging Programme: Access into Employment Fasset Update March 2013 • Designed to assist unemployed learners (NQF levels 6 – 8) and bridge the gap between theoretical learning and workplace experience. • Accounting and non-accounting graduates • Unemployed, part of NEET population of learners • Ministerial imperative • Will undergo work readiness programmes e.g. bridging technical, assertiveness, it, English language, attitude • Available for employment on learnerships, internships or full-time employment • Employers will have access to increased numbers of employable learners • Broader economy will benefit with learners who have a cross-cutting skill that is needed to grow the whole economy

15. Upcoming Research Fasset Update March 2013 • To assist the Board and sector in aligning training to strategic objectives. • 2012/13 (Year 13) Grant Analysis Report • Sector Skills Plan Update for the period commencing 1 April 2014 • Annual Benchmarking of Training in the Sector • Learnership Readiness Pack • Internship Readiness Pack • Lifelong Learning Learnership Programme (LLLP) Employer Support Guide • Tracer Study on Development Projects (Academic) • Database Update (Employers) • Database Update (Learners)

16. FET Funding Window Fasset Update March 2013 • To develop FET colleges, which is also a national and ministerial imperative. • Capacitating FET colleges with funding set aside • Improvement of relevant courses offered by FET colleges • Development of lecturers so as to ensure a quality supply of FET learners • Partnership agreements to be put in place with Waterberg and Sekhukhune FET colleges in Limpopo as part of a broader joint Seta initiative to establish a regional presence in rural areas and townships through FET colleges • Fasset will support the co-ordinated Seta collaborative effort to establish a regional presence in rural areas and townships through public FET colleges • Appointment of a Fasset Provincial Liaison / Brand Ambassador

17. Career Guidance and Provincial Strategy Fasset Update March 2013 • Fasset has an intensive National Career Guidance campaign: • In line with DHET’s National Career Guidance initiatives • Setas have a role to play in drawing the youth into the mainstream economy • Targeting learners from Grade 9 level onwards, awareness on careers in finance • Extend and deepen Fasset’s footprint and reach in rural and impoverished areas • Fasset Brand Ambassadors • Print and online advertising • Exhibitions • Print and digital motivational career guidance material • Social media • Partnerships

18. Stakeholder Engagement Fasset Update March 2013 • Engaging with Fasset stakeholders by informing and educating through regular, effective communication, meeting the following strategic imperatives: • The promotion of critical and scarce skills areas within our sector • Promotion of skills development within sector through targeted marketing • Promoting skills, access to jobs, sustainable livelihoods via development projects • Developing a culture of high-quality, lifelong learning and fostering skills development for high-quality jobs • Focus on the critical SMME component, specifically levy-exempt employers • Fostering skills development in the formal economy for productivity and employment growth

19. Tools Fasset Update March 2013 • Fasset website: www.fasset.org.za • On the website you can gain access to the following: • Download all the application forms you are required to complete for the grants • Latest Fasset information • List of all the relevant Fasset contacts • List of Fasset learnerships • Apply for Mandatory Grant online • Lifelong Learning calendar

20. Fasset Update March 2013 Thank You For more information please contact the Fasset Call Centre on 086 101 0001 or visit www.fasset.org.za

21. Facilitated by Deloitte.

22. Introductory Overview

23. Where is most of our tax collected?* *Figures per Budget Review 2013

24. Detailed comparison of revenue – 2013 vs. 2012* *Figures per Budget Review 2013

25. Detailed comparison of revenue – 2013 Actual To Budget * *Figures per Budget Review 2013

26. Budget Proposals: Individuals

27. Budget – Individual Overview • Personal income tax relief of R7 billion • Individuals whose taxable income is from one employer and is below R250 000 a year are not required to submit income tax returns • Clarity on Retirement reforms • Tax-preferred savings and investment vehicles are to be introduced by 2015, to encourage greater savings • Tax relief on transfer of low cost housing to employees • Rules to ensure uniform tax treatment of employee share schemes • Monetary threshold for bursaries given to relatives of employees be increased • Alignment of income protection and disability policies • Amendment to exemption when working offshore

28. Budget – Individual Rates • Rebates • Thresholds

29. Budget – Individual Fiscal Drag Effect of fiscal drag

30. Budget – Individual Fiscal Drag Effect of fiscal drag

31. Budget - Tax-preferred savings and investment vehicles • Tax exempt: Returns generated (including interest, capital gains and dividends) • Annual contributions limited to R30 000 p.a. per taxpayer (no rollover) • Lifetime limit of R500 000 (to be adjusted for inflation) • Interest exemptions to be replaced with interest bearing and equity savings vehicles • Purpose of this is to encourage savings to fund short and medium term expenditure • Current status: The new accounts will be introduced by April 2015.

32. Budget - Retirement reforms • Retirement fund contribution deduction 27.5% of greater of remuneration or taxable income limited to R350 000 • Contributions in excess of the annual capped amounts may be rolled forward to future tax years • Non-deductible contributions will be exempt on retirement – both annuities & lump sums • Provident fund contributions to be allowed as part of the 27.5% tax deduction • Employer contributions to retirement funds will constitute a taxable fringe benefit, which will qualify for the 27.5% tax deduction. • Proposed that provident funds are subject to the same annuitisation rules as pension and retirement annuity funds.

33. Budget - Individuals Trust reform • Proposals not apply to special trusts (minor children or disabled persons) • Discretionary trusts will no longer operate as flow-through vehicles • Taxable income/(loss) and capital gains/(losses) taxed in trust • Distributions treated as deductible expenses iro current taxable income • Possible double taxation of capital gains • Review of trusts as generation skipping devices

34. Budget - Individuals

35. Budget - Individuals • Disparity between deduction on disability or income protection policies • Proposed treatment is non-deductible contributions and exempt pay-outs • Cross border services • Current – exemption from SA tax if > 183 days outside SA in 12 months • Proposal indicates possible substitution on of exemption tax credits if SA employer

36. Amendments: Individuals

37. Medical • For the 2013 (and 2014) tax year there is a combination of rebates and deductions • The phasing in of the rebate system as opposed to the deduction system will be complete by 1 March 2014 (i.e. the start of the 2015 year of assessment) when the s18 deduction provisions will be deleted

38. Leave pay and other variable cash remuneration • Section 23E deleted and section 7B inserted • From 1 March 2013 • Leave pay, over-time pay, commission, bonuses and travel reimbursement will shift to a “payment basis”. • Payment will trigger • employee gross income • pay-as-you-earn withholding, and • employer deductions.

39. Provision of leased (operating) company cars par 7 7th Schedule: • Fringe benefit for car use currently based on premise employer owns the vehicle –determined value based on car value • Companies increasingly renting cars-rental costs will now form the basis of the fringe benefit value • The employees can still claim a deduction based on business v private use • The benefit of using an employer’s petrol card will form part of inclusion in cost if linked to specific vehicle

40. Employer owned insurance policies • Amendments to clarify when s11(a) deduction on employer owned insurance policies may be claimed • Specific exclusion from 11(w) widened to include: • insurance policies against death/ disability /severe illness in the course of employment • The effect will be to allow 11(a) deduction for these policies • This will not create a fringe benefit but any pay-out to employee will be taxable

41. Cession Of Employer-owned Insurance Policies (With Investment Values) To Retirement Funds • Paragraph (d)(iii)(cc) of the definition of “gross income” in section 1 • Deferred compensation schemes used as retirement saving vehicle • Concession allows for a cession of employer-owned insurance policies (despite any investment element) to a pension or provident fund without triggering tax for employees • Deferred compensation schemes will continue to be discouraged going forward

42. Exemption For Compulsory Annuity Income Stemming From Non-deductible Retirement Contributions • Insert section 10C; amend section 11(n); amend paragraphs 5(1) and 6(1)(b) of the Second Schedule • Lump sums are exempt to the extent that non deductible contributions were made • This will be extended to retirement annuities

43. Provisional Tax Amendments • Tax Administration Laws Amendment Act • Clarity that retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit excluded from estimate of taxable income • Current anomaly that creates a potential penalty where actual tax paid exceeds the estimate is addressed • Clarity that penalties are considered percentage based penalties imposed under Chapter 15 of the Tax Administration Act

44. Budget Proposals: Corporate

45. Budget - Corporate Relief for small businesses corporations and social-impact firms • Reforms to the tax regime applicable to small business corporations are proposed. • The reforms are aimed at broadening the regime for qualifying entities by increasing the turnover limit from R14 million to R20 million. • It is proposed to provide additional tax relief for qualifying companies in the form of an increase in the tax threshold and a reduction in tax payable on the first R550 000 of taxable income.

46. Budget - Corporate Protection of the tax base • Closure of artificial and excessive debt has been on the tax policy agenda for more than two years • Rules on artificial debt – will re-characterise to treat as shares (with interest deduction disallowed) • Rules on connected person debt – will place limits on interest incurred, with a roll over for interest disallowed • Rules on acquisition debt – time limits to be imposed for claiming interest

47. Budget - Corporate Tenant improvements to commercial buildings • It is proposed that the ownership test for allowance be replaced with “possession and use” • Associated amendments to the taxation of the lessor and treatment of leasehold improvements will be effected • The lack of allowance to commercial tenant was complicating many commercial arrangements

48. Budget - Corporate Special Economic Zones • Tax treatment in special economic zones designed to attract investment • 15% corporate income tax rate for businesses • Tax deduction for employment of workers earning less than R60 000 p.a. • Accelerated depreciation allowance for buildings Donations • Donations to PBOs in excess of the current allowable limit of 10% of taxable income will be carried forward and allowed as a deduction in subsequent years Clarification of trading stock cost calculations • It is proposed that the cost price of trading stock automatically agree to IFRS without the need for SARS approval

49. Budget – Corporate Employment Tax Incentive • A youth employment tax incentive will be tabled in parliament within the course of this year. • This incentive will be aimed at providing the youth with the opportunity to enter the labour market, gain valuable experience and access career opportunities. • It will be a graduate tax incentive at the entry-level wage, falling to zero when earnings reach the personal income tax threshold.

50. Amendments: Corporate