Does contractors income fall under the definition of Remuneration for SDL purposes? I have a labour broker who is paying contractors monthly. Should they be paying SDL on the income that they pay the contractors?
Important:
This answer is based on tax law for the tax year ending 28 February 2017.
Answer:
In terms of section 3(4) the Skills Development Levies Act, 1999, but subject to subsection (5), the leviable amount means the total amount of remuneration, paid or payable, or deemed to be paid or payable by an employer to its employees during any month, as determined in accordance with the provisions of the Fourth Schedule to the Income Tax Act for the purposes of determining the employer's liability for any employees' tax in terms of that Schedule, whether or not such employer is liable to deduct or withhold such employees' tax.
In terms of section of the same Act "employee" includes an employee as defined in the Fourth Schedule to the Income Tax Act.
An individual would not be an employee if the individual rendered the services in the course of a trade carried on independently (as required by proviso (ii) to the definition of remuneration in paragraph 1 of the Fourth Schedule to the Income Tax Act).
Do remember that in this regard an individual will be deemed not to carry on a trade independently if the services are required to be performed mainly at the premises of the person by whom payment is made or the person to whom the services are rendered AND the person rendering the services is subject to the control or supervision of any other person as to the manner in which his duties are performed or as to his hours of work.
You mention that the person making the payments is a labour broker, we accept it is a labour broker as defined in the Income Tax Act. It is then important to note that, in terms of the definition of employee (in paragraph 1 of the Fourth Schedule) “any person who receives any remuneration or to whom any remuneration accrues by reason of any services rendered by such person to or on behalf of a labour broker” will be an employee.