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by Alex Kinmont

Our country’s history still has a profound impact on the lives of many South Africans today. Broad-Based Black Economic Empowerment (B-BBEE) is the policy initiated by the SA government to mend these past inequalities. B-BBEE hopes to re-distribute wealth to previously disadvantaged black South Africans.

On Friday, finance expert Sohana Singh-Naicker and transformation and skills development expert Anusha Mariemuthuexplained the tax benefits which come with meeting B-BBEE requirements for education and training work, and we can best utilise them. In doing so, we can score B-BBEE points and increase training budget without incurring additional costs.

Sohana is a finance expert and business consultant. She has worked in finance and management at companies such as Ernest & Young, Natal Bio-Products, Mondi Paper, MTN Banking, Putco Limited, Chubb, Securitas and Polo SA. Sohana earned her BComm degree in Finance from the University of Natal.

Anusha is an expert in the Transformation space who implements sustainable B-BBEE and Transformation strategies, Change Management and Learning and Development. She has 17 years of specialised experience and holds a B Com(Hons)-Cum Laude in business management and marketing from the University Of Kwa-Zulu Natal.

Broad-based black economic empowerment is the policy initiated by the SA government to mend our country’s past inequalities, where people of colour are still suffering from the effects of Apartheid. Where we may be equal in law, the economic impact of Apartheid on non-white South Africans will affect us for generations to come.

The policy incentivises companies to invest in black youth and give opportunities to those who have not had access to the education and facilities that would otherwise have made those opportunities possible. Anusha and Sohana spoke to us about the tax benefits available to companies when they invest in the training and skills development of young South Africans.

There are two types of incentives available for learning: Employee Tax Incentive (ETI) from SARS reduces hiring costs through a cost-sharing mechanism, where a company is allowed to reduce Pay As You Earn (PAYE) without affecting an employee’s wage. Tax breaks for learnerships, a Section 12H allowance, allows you reduced tax liability in the form of a tax allowance per learner.

Your business will only qualify for these incentives if you meet the Department of Trade and Industry’s (the DTI) B-BBEE requirements for skills development, which in turn gain you points. B-BBEE runs via a scorecard system where companies can choose a selection of requirements to meet, from black ownership to enterprise development. The better your company’s B-BBEE scorecard, the more chance you have of government grants and the better relationship you have with suppliers.

By understanding these incentives and knowing how the numbers work, Human Resource departments are better able to approach Finance departments for training budget. Sohana explains how this is key to curating better communication and understanding better Finance and HR. If HR are able to understand the numbers, then Finance will be able to realistically fund training.

Aside from knowing that your company is helping move South Africa forward by improving people’s lives through education and meaningful employment, having a good B-BBEE scorecard improves your company’s overall standing. You will be more attractive for future business opportunities, particularly with corporate and government entities. Good B-BBEE compliance, along with tax benefits, makes your company more favourable to clients and customers.

Anusha describes a good B-BBEE scorecard as “your tender and your tool for doing business in the economy, whether you do business with private companies or government entities.”

There are of course many internal benefits of meeting the B-BBEE requirements for skills development. Your business will generate improved employee engagement through investing in your workers and future workers, making them likely to work for you longer. Your workforce will be better trained as students become specifically skilled employees, rendering greater results. You will be more favourable for doing business with government and other corporate entities. Economically, you will save on tax breaks and build on your B-BBEE points, and as you will qualify for DTI incentives, the cost of your employees is reduced.

For your business, investing in learnerships according to B-BBEE standards is well worth the time. Funding learnerships for young people is not as expensive as you think. As taught by Sohana on Friday, after you deduct the financial assistance you will qualify for from the DTI and apply the respective tax breaks, the total cost is minimal. Considering the benefits of a good B-BBEE scorecard, such as employee investment and satisfaction and company reputation, investing in future leaders is not only financially possible, but extremely beneficial.

We now understand the economics around B-BBEE learnerships, and so your Human Resources can now effectively communicate the idea of meeting training requirements to your finance departments as affordable and favourable.

Sohana and Anusha helped us understand that investing in young people through learnerships and training does not cost us what we think it will cost us. After combining financial assistance from the DTI and the tax breaks for learning, the cost of running out learnerships is drastically reduced. The final minimal cost is well worth the future employee investment and government favourability that come with a better B-BBEE scorecard.

This is how we can move South Africa forward, invest in our business, improve our company’s standing and change lives all at the same time.

For more information on our qualifications, click here.