Skills Development Levies (SDL)

Who should register for SDL?

Where an employer expects that the total salaries will be more than R500 000 over the next 12 months, that employer becomes liable to pay SDL.

Even though directors’ remuneration is also subject to the SDL, what should not be forgotten though (especially in the context of what appears to be the focus of SARS’ audits) is that directors’ remuneration is excluded in terms of section 3(5)(e) from determining whether the threshold amount of R500,000 has been reached and which requires registration for SDL purposes (see section 4(b)).

Therefore, although the directors’ remuneration will be subject to SDL once the company is registered, it is ignored for purposes of determining whether a taxpayer is liable, and thus required to register, for SDL.

This is particularly relevant for small and medium enterprises who conduct business through a private company, especially where remuneration is comprised largely of directors’ salaries.  To give an example: assume a private company pays salaries to non-directors of R400,000, and R1,000,000 to the two directors of the company collectively.  On these facts, the company need not register and pay SDL as non-director salaries amount to less than R500,000.  Were the company however to pay salaries to non-directors of R600,000, then irrespective of the directors’ remuneration, the company would need to register for SDL and pay 1% per month on the total remuneration paid to all employees (including directors).