BANKSETA ANNUAL REPORT 2023

ANNUAL FINANCIAL STATEMENTS NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2023

17. CONTINGENCIES (continued)

17.3 Contingent liability

17.3.1 Contingent liability in regards to mandatory grant percentage In terms of section 4(4) of the SETA grant regulations, the SETA (guided by the Minister) determines the percentages for mandatory and discretionary levies and grants in consultation with the sector. In 2012, the Minister changed the mandatory grant and levy percentage from 50% to 20%. In October 2019, the courts set aside the Minister’s 2012 decision to decrease the mandatory grant and levies portion from 50% to 20%. The courts did not set the new mandatory percentage to be applied from the court decision date onwards. The effect of the ruling is that the Minister would have to decide on the percentage for mandatory grants in consultation with the sector. As at year-end, the Minister has not yet made the decision or communicated the process to determine a revised percentage. The SETA continued to pay and accrue mandatory grants at 20% in the 2022/23 financial year in the absence of a revised percentage, as the 20% level is aligned to the approved annual performance plan. The board ratified the decision to continue to use the 20% level whilst awaiting the Minister’s decision. The mandatory levy income in note 10 and the mandatory grant expenditure in Note 14 as well as the mandatory grant liability in note 7 were calculated using mandatory levy and grant percentage of 20%. The skills branch of DHET has established that there have been no further developments in relation to the BUSA case in the 2022/23 financial year or after year-end that are material to the matters or indicate any direction in regard to this matter. The SETA therefore discloses a contingent liability in regard to the amount of the mandatory grants payable to qualifying levy payers. This is disclosed as a liability as the intention of the litigants, BUSA, was to increase the mandatory grant percentage from 20%. The timing of this contingent liability is uncertain. Currently the department is in discussions with BUSA in regard to the mandatory grant percentage. DHET has also gazetted legislation for public comment which introduces a 15% workplace skills grant from 2024/25 year onwards to employers with approved workplaces. The amount cannot be determined for the contingent liability as no percentage has yet been declared by the Minister. No reliable estimate can be made of the contingent liability due to uncertainty of the new rate and the effective date of application of any new rate. DHET continued to show the mandatory levies portion as 20% in 2022/23 year in the levy download information.

The BANKSETA has limited uncommitted reserves of R25 000 to cover any liability after year end.

Should the outcome be that the BANKSETA must pay mandatory grants at a higher level since the court decision, the BANKSETA would be able to cover the amounts due to the long-term payment schedules for discretionary grant commitments.

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PART F: FINANCIAL INFORMATION | BANKSETA ANNUAL REPORT 2022/23