Employers ask which SETA they should be with, as though it were a choice. It is not. It was decided when you registered with SARS, by a code most business owners have never looked at.
Being in the wrong one is more common than people expect, and it quietly costs money for years.
What decides which SETA you belong to?
When an employer registers with SARS as a skills levy payer, SARS assigns a Standard Industrial Classification code. That code describes the business activity, and it is what determines which SETA receives your levy.
Two consequences follow, and both surprise people.
The first is that nobody at your company chose it. It was derived from how the business was described at registration, possibly years ago, possibly by an accountant filling in a form.
The second is that it does not update itself. A business that started as a distributor and is now predominantly a manufacturer still carries the code it registered with, and still pays its levy to the SETA that code points at.
Not sure where your own submission stands? Send us a payroll summary and we will tell you what you have been entitled to and what has actually been claimed.
Request a call backHow do you find out which SETA you are registered with?
Most employers cannot answer this from memory, and guessing from the industry name is unreliable because the sector boundaries do not match ordinary language.
The reliable route is your SARS registration details, where the SIC code sits, read against the schedule that maps codes to SETAs. There are more than twenty SETAs, and several cover territory that sounds like somebody else's.
If your payroll provider files your EMP201 returns, they will have the registration information. If nobody in the business has looked at it since registration, that in itself is worth twenty minutes.
How do employers end up in the wrong SETA?
The business changed and the code did not
This is the most common case by a distance. Companies diversify. A contractor adds a plant hire arm, a manufacturer's distribution side outgrows its factory, a printer moves into packaging. The registered activity stops describing the business and nobody updates it because nothing forces them to.
The business genuinely straddles two sectors
Some employers are legitimately hard to classify. A company that manufactures and installs sits between two SETAs. A food producer with a large retail operation sits between two more. There is a correct answer, based on the main business activity, but it is a judgement rather than a lookup.
Nobody checked at registration
The code was assigned from a description written by somebody who was thinking about tax registration, not skills development, and it was never examined again.
What does being in the wrong SETA cost you?
The levy is still collected either way, so nothing looks broken from the payroll side. The damage shows up further down.
Your Workplace Skills Plan is assessed against the wrong sector's priorities and the wrong occupational profile. Discretionary grant windows you would qualify for are being run by a SETA you are not registered with. Sector scarce skills lists that would support your applications belong to somebody else. And when a claim is queried, the mismatch between what your business evidently does and the sector it is filed under is exactly the kind of thing an assessor notices.
The levy is paid regardless. Being in the wrong SETA does not save you anything, it just makes the money harder to get back.
Can a company change SETA?
This is the part most employers do not know exists. If you are registered with the wrong SETA, you are not stuck with it.
SETAs operate an inter-SETA transfer process. The mechanics vary by SETA, and each publishes its own form and criteria, but the shape is consistent. You complete the transfer request, submit it to the SETA you are currently registered with, and it is processed between the two SETAs with SARS updated accordingly.
Because the process and the form differ by SETA, the practical first step is to confirm which SETA you are currently in and ask that SETA for its transfer requirements, rather than approaching the one you want to move to.
Timing matters. A transfer part way through a levy year complicates which SETA assesses that year's submission, so it is worth starting the conversation well before the submission window rather than in April.
Before you assume you are in the wrong one
Being in a SETA that sounds unrelated is not proof of an error. Sector boundaries are drawn around economic activity rather than around how companies describe themselves, and plenty of employers are correctly placed somewhere counter-intuitive.
Test it against the actual rule. Which activity generates the majority of your revenue and employs the majority of your people? That is the question the classification is trying to answer, and if the current SETA matches that, it is right even if it feels odd.
How was your SIC code assigned?
When an employer registers with SARS as a levy payer, SARS assigns a Standard Industrial Classification code based on the business activity described at registration. That code is what routes your levy to a particular SETA, and it is also what the Department of Higher Education and Training uses to know which SETA you belong to.
Nothing about that process asks the employer to consider skills development. It happens inside a tax registration, usually alongside PAYE and UIF, and it is very often completed by an accountant working from a one-line description of the business.
Which is why so many codes describe a company that no longer exists.
There are twenty-one SETAs, and the boundaries are not intuitive
Employers tend to guess from the industry name, and the guess is wrong often enough to matter. A few of the boundaries that catch people: Agriculture and chemicals show this clearly, because both sectors run long boundaries into manufacturing and food processing.
- A company that manufactures and installs sits between a manufacturing SETA and a construction one. The main activity decides, not the more prestigious one.
- A food producer with a substantial retail arm sits between food and beverage manufacturing and wholesale and retail.
- Printing and packaging sit with textiles and furniture rather than with media, which surprises almost everybody who has not dealt with it.
- A business whose product is a service delivered by technicians may sit in services rather than in the sector its clients occupy.
Our sector guide sets out the main mappings and where each SETA tends to trip employers up.
What the levy actually pays for once it reaches your SETA
Worth understanding, because it explains why being in the wrong sector costs more than it appears to.
Your SETA uses its share to fund the mandatory grants it pays back to compliant employers, the discretionary grants it allocates against its sector priorities, and its own sector skills planning. Those priorities are set by what that sector needs, not what yours does.
So an employer registered in the wrong sector is contributing to another industry's scarce skills, and is eligible to apply only for funding aimed at occupations that are not theirs. The levy is not lost, it is simply working for somebody else.
Multi-site and multi-activity employers
This is where it gets genuinely difficult, and where professional judgement earns its place.
A group with several operating entities may legitimately have entities in different SETAs, because each entity has its own SARS registration and its own main activity. That is normal and correct, and it means one group can be running two or three separate submission cycles on the same deadline.
A single entity operating across two activities is different. There is one registration and therefore one SETA, decided by the predominant activity. Employers in this position sometimes attempt to allocate staff across two SETAs. That is not how the system works, and it produces submissions that neither SETA can reconcile.
What should you check on your SARS profile?
- The SIC code recorded against your SDL registration.
- Whether the SDL registration itself is active. Dormant registrations exist, and a dormant one blocks a grant claim.
- Whether the registered business activity still describes what the company mainly does, measured by revenue and by headcount.
- For a group, whether every operating entity with a payroll above the threshold is registered, rather than only the main one.
That last item catches growing groups regularly. A subsidiary that crossed the R500 000 threshold two years ago and was never registered is accruing an obligation quietly.
Timing a transfer
A transfer part way through a levy year raises an awkward question about which SETA assesses that year's submission, and the answer is not always the one you would like.
The practical approach is to start the conversation well outside the submission window, ideally in the middle of the levy year rather than in the quarter before 30 April. That gives both SETAs time to process it and gives you a clean cycle on the other side, rather than a split year that neither SETA regards as its own.
If a transfer is going to land close to the deadline, it is usually better to submit correctly to your current SETA for that cycle and transfer afterwards. A submission to the wrong SETA is still a submission. A submission to nobody, because the transfer was in progress, is not.
A short sequence worth running
- Pull your SARS registration and find the SIC code.
- Identify which SETA that code maps to.
- Test it against your main business activity by revenue and headcount.
- If it matches, register your SDF with that SETA and learn its portal and its windows.
- If it does not, ask your current SETA for its inter-SETA transfer requirements, and plan the timing around the submission cycle.
Our sector guide sets out the main sector to SETA mappings and where each one tends to trip employers up. If you are about to submit and are not confident the file is going to the right place, ask for a call back and we will check the registration with you.
Sources used: SARS on the skills development levy, and published SETA guidance on registration and inter-SETA transfers.