Should directors of private companies and CC’s contribute Skills Development Levies (SDL) that is 1% levy on their monthly salaries?
Be advised that the remuneration paid/payable to directors of private companies (including members of close corporations) must also be included when calculating the leviable amount for SDL. The amount must be calculated by using the actual remuneration of the director.
This can only be explained by an example:
Mr Small is a director of company X. and receives a monthly salary of say R20 000 for the 2015 tax year. But in January 2015 received an annual bonus as a Director of R200 000. This is not an annual fixed amount. It is given that directors will receive a variable amount at the end of each financial year.
The SDL amount will based on the actual monthly amount of R20 000 (that is 1% of R20 000). The amount of R200 000 will not be regarded as remuneration for SDL purposes in terms of para11 (C ) of the Fourth Schedule of the Income Tax Act. Paragraph 11 (C ) is a mechanism used to calculate a deemed monthly remuneration tin order to calculate the employee tax. If the employee was a director of the company in the previous tax year, his employees tax will based on the deemed amount calculated as per the formula in para 11 C, the employees tax will be based on the deemed remuneration but the SDL will be based on the actual remuneration.