Tax Treatment of TERS Benefits

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There has been some uncertainty regarding whether TERS benefits will qualify for an exemption from income tax. During recent discussions with the South African Revenue Service (SARS), it has been confirmed that TERS benefits are payable in terms of the Unemployment Insurance Act and thus exempt from income tax.

It is important to keep in mind that it is the employee, and not the employer, who becomes entitled to the payment of TERS benefits. Accordingly, in those instances where the employer receives the TERS benefits from the Unemployment Insurance Fund (UIF) in order to pay to employees, the employer is merely processing the payment on behalf of the UIF.

The complete article is available on the Bowmans website.