Updated Interpretation Note on Tax Deductions for Learnership Agreements
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SARS has issued the updated Interpretation Note 20 (Issue 9) to provide guidance on how employers can claim additional tax deductions for learnership agreements under section 12H of the Income Tax Act. This tax incentive is meant to encourage skills development and job creation in South Africa.
💼 What is Section 12H?
Section 12H allows employers to deduct two types of allowances for each qualifying learnership:
Annual Allowance – a deduction during the period the learner is enrolled.
Completion Allowance – a once-off deduction when the learner successfully completes the learnership.
These allowances apply to registered learnerships (including apprenticeships) entered into before 1 April 2027.
📋 Basic Conditions to Qualify
To qualify for the deduction:
The learnership must be registered with a SETA.
The learner must be employed by the lead employer named in the agreement.
The employer must earn income from the trade the learner is trained in.
The employer must keep supporting documents and submit the required reports to the SETA.
💰 Deduction Amounts
Annual Allowance (per year)
R40,000 if the learner has an NQF Level 1–6 qualification
R20,000 if the learner has an NQF Level 7–10 qualification
Pro rata if less than 12 full months
Extra R20,000 or R30,000 for learners with a disability
Completion Allowance (once-off)
Same base amounts as above
For learnerships <24 months, the allowance is once-off
For learnerships ≥24 months, multiply the allowance by the number of full 12-month periods
Higher amounts apply for learners with disabilities
⚠️ Key Points to Note
No double-dipping: If a learner failed a similar learnership before with the same employer or an associated institution, the new agreement may not qualify.
Proof of completion is essential — SETA confirmation or equivalent evidence is needed.
Employer substitutions are allowed, but only the final employer can claim the completion allowance.
Reporting to SETA is mandatory for each year the allowance is claimed.
🧮 Example in Practice
An employer who enters into an 18-month learnership with a learner holding an NQF Level 6 qualification may claim:
R60,000 in annual allowances over two years (pro rata per year)
R40,000 as a completion allowance when the learner finishes the programme
If the learner has a disability, the total claim could increase significantly due to enhanced allowances.
🧠 Why It Matters for Accountants
This incentive can significantly reduce taxable income for qualifying employers. Accountants should ensure:
Learnerships are correctly registered
Claims are supported by valid documentation
Timely reporting to SARS and SETAs is done
Employers are advised on structuring these agreements before 1 April 2027
📌 Make sure clients don’t miss out on these valuable deductions!
