Tax relief to employers of domestic workers as a means of addressing unemployment.
Date
2012
Authors
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Abstract
South Africa’s unemployment rate is among the highest in the world. The domestic worker
sector pose an opportunity to creating sustainable employment and to date many people still
find employment as domestic workers in the country. This presents an opportunity to the
government and South African Revenue Services (SARS) to recognise the valuable
contribution the employers of domestic workers make to creating employment. By such
recognition the government and South African Revenue Services (SARS) should reconsider
the negative test of the Income Tax Act under section 23 which prohibits and limits the
deduction of the cost of maintenance of the taxpayer that is full-time salaried unless the home
of such taxpayer is regularly and exclusively used for the purpose of trade. The initiative to
this regard has already been indirectly implemented by the government in that the South
African Revenue Services (SARS) has already made the employers of domestic workers
responsible to the collection of the Unemployment Insurance Fund (UIF). Similarly, they
should allow a claim of the wages paid to domestic workers to be a tax relief to their
employers. This is the first study attempting to engage the government on the policy level.
The overall aim for the consideration of this study is to determine how the tax relief of a
domestic worker wage would contribute to job creation and how will the tax relief benefit
both the employer and employee. A tax relief has immediate results as it increases the
disposable income of the taxpayer, increases affordability of goods and services which in turn
stimulate the economic activity (Altman, 2007). A tax relief to employers of domestic
workers could be seen as a clear illustration that job creation filters all policy considerations.
This tax relief consideration in itself creates a platform for debate and negotiation that can be
interpreted to specific country dynamics. The research instrument and technique used in the
study was developed through intense review of literature. Due to limited resources and time
constraints the researcher could not access a big enough number of participants which could
have otherwise yielded more insightful results. Therefore the current study can be improved
by engaging more participants that qualify for the intended research.
Description
MBA University of KwaZulu-Natal, Durban 2012.
Keywords
Tax incentives--South Africa., Job creation--South Africa., Unemployment--South Africa., Household employees--South Africa., Household employees--Employment--South Africa., Theses--Business administration.