Q&A: Can my Ters payment be taxed?

Q: I was laid off for four weeks and paid for one week of leave I had owing. My employer was paid the Temporary Employer/Employee Relief Scheme (Ters) benefit by the Unemployment Insurance Fund (UIF) but when it paid the benefit to me it applied tax to this money. Is that correct? — Jan, via e-mail

A: Bradley Workman-Davies, director at Werksman Attorneys, replies:

In my view the amount is not taxable or subject to Pay As You Earn (PAYE), as the amount paid by Ters is a statutory benefit payable by the UIF and is not remuneration payable by the employer (which is subject  to PAYE).  

Your employer in this case is simply the conduit for payment of the benefit by the UIF. That the employer acts as the payment agent does not convert the Ters benefit (payable by the UIF) into remuneration payable by it (the employer).

Your employer should reverse the deduction on the basis that:

• It will have to account to UIF/Ters for how it has disbursed the payment to you, which should not have been subject to PAYE; 
• It may then be in credit with the SA Revenue Service (Sars) due to having  overpaid Sars, but Sars will in all likelihood not reimburse you directly (unless this happens at the end of the tax year for you and you can show that an overpayment of tax was made for you).

* Send your questions to money@arena.africa