BANKSETA ANNUAL REPORT 2023

ANNUAL FINANCIAL STATEMENTS ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2023 5. REVENUE RECOGNITION (continued) Exempt registered member companies of the SETA Companies with an annual payroll cost less than R500 000 are exempted from paying the 1% skills development levy, in accordance with section 4(b) of the Levies Act as amended, effective 1 August 2005. An employer who is liable to pay the levy is exempted if, during any month, there is reasonable ground to believe that the total remuneration (as determined in accordance with the Levies Act) payable or paid by the employer to all its employees during the following 12 month period will not exceed R500 000. Should the SETA receive any SDL from such possibly exempt companies, the SETA recognises a payable shown as a provision equaling the SDL received from these possible levy exempt companies. As per the Skills Development Circular 09/2013, should the levies received from exempt companies not be refunded to the respective employer through the SARS system after five years from receipt, the SETA transfers all monies received from exempt companies to levy revenue. Such levies are allocated to discretionary levies. Levy income is recognised on the accrual basis Revenue is adjusted for interSETA transfers due to employers changing SETAs. Such adjustments are separately disclosed as interSETA transfers. The amount of the interSETA adjustment is calculated according to the most recent standard operating procedure issued by the Department of Higher Education and Training. Skills development levy (SDL) transfers are recognised on an accrual basis when it is probable that future economic benefits or service potential will flow to the SETA and these benefits can be measured reliably. This occurs when the Department of Higher Education and Training makes an allocation of the SETA, as required by Section 8 of the Skills Development Levies Act, 1999 (Act No. 9 of 1999) as amended. 5.1.2 Adjustments to levy, penalties and interest income previously recognised SDL is levied and collected by the South African Revenue Services (SARS) in terms of the Income Tax Act. SARS has review processes to assess if the revenue charged was correctly and completely charged/ declared in terms of the prescribed taxation and levy rates and on the correct basis. This may result in SARS itself identifying that the levies collected need adjustment. Levy payers may also through their own processes identify the need for such levy adjustments. Declaration, appeal or objection process undertaken in terms of legislation or similar means may result in adjustments being passed to levies already collected. Such adjustments may be made up to seven years after the levy is charged and/ or collected. SARS passes all such adjustments to levies through DHET to the relevant SETA. When settling the levy receipts with the SETA, SARS nets off such levy adjustments against current levy receipts. The BANKSETA therefore receives its levies funds monthly net of all levy adjustments. The levy information, however, splits up levies amounts between the adjustments and current levies showing the correct months and years that the transactions relate to in order to facilitate accurate accounting. Adjustments to levy revenue already recognised arise from the completion of a SARS’ internal review process, and/or the outcome of an external appeal or objection process undertaken by employer companies. Adjustments to revenue include any refunds that become payable as a result of the completion of a review, appeal or objection process. Refunds are recovered directly from monthly revenues by SARS, and the SETA recognises revenue on net basis as and when it becomes receivable. The SETA has no access to or control of the appeal or review process carried on by SARS, and hence cannot reasonably be expected to have access to reliable information at the initial stage of recognition. The adjustments to levy or levy interest and penalty revenue already recognised in prior years, following the outcome of a review, appeal or objection process, are therefore accounted for as a change in an accounting estimate, and not as a correction of an error.

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BANKSETA ANNUAL REPORT 2022/23