The historically high levels of unemployment among the youth in South Africa has led to the introduction of various tax incentives and benefits aimed at encouraging the employment and training of such persons. Among these is the employment tax incentive (ETI) scheme which was introduced by the Employment Tax Incentive Act, No 26 of 2013 (ETI Act). The ETI is a temporary tax incentive aimed at encouraging employers to employ young employees between the ages of 18 and 29, as well as employees of any age in special economic zones and industries indicated by the Minister of Finance. The benefit for employers is that the ETI enables eligible employers to reduce the amount of employees tax due by them by the ETI amount claimed.
Government formally introduced the employment tax incentive into law on 1 January 2014, through the promulgation of the Employment Tax Incentive Act, No 26 of 2013. The purpose of the employment tax incentive was to reduce the cost to employers of hiring young and inexperienced youth. In other words, the employment tax incentive is essentially a cost-sharing mechanism between the private sector and Government, which operates by reducing the amount of tax that is owed by an employer through the Pay-As-You-Earn (PAYE) system.
Author: Lloyd Ponter, Tax Consultant Grant Thornton Johannesburg The Employment Tax Incentive (“ETI”) was introduced from January 2014 and is scheduled to end on 31 December 2016, when its effectiveness will be reviewed to determine whether it should continue beyond this date. Despite the possible termination looming, employers still have an opportunity to benefit from this incentive. In summary, the ETI is available to “eligible employers” as defined in the Employment Tax Incentive Act and can be claimed in respect of “qualifying employees.” The ETI is aimed quite specifically at the private sector and its intention is to encourage the employment of employees of a certain profile. This includes employees who inter alia:
Author: Siyabonga Mkhwanazi (IOL) AT LEAST 209 000 youth have been absorbed into the labour market this year under the government’s youth employment tax incentive scheme, a significant increase from the 56 000 young people announced by then finance minister Pravin Gordhan in his Budget speech in February. Gordhan said at the time, during the first month of the launch of the scheme, 56 000 young people were employed by different companies.
How does it work? The Employment Tax Incentive Act and the draft amendments to this Act in terms of the Draft Taxation Laws Amendment Bill, 2014, allows for the introduction of a refund process that will refund employers the amount of the allowable ETI that wasn’t used to reduce the Employees’ Tax amount payable at the end of each six month reconciliation period (1 March to 31 August and 1 September to 28/29 February). An ETI refund will only be paid if an employer is tax compliant. This means that all tax returns have been submitted and there is no outstanding tax debt, when the Employer Reconciliation documents [EMP501 and IRP5/IT3(a)s] are received and processed by SARS. Top Tip: A non-compliant employer will have six months from the start of the next reconciliation cycle (1 September to 28 February or 1 March to 31 August in respect of the interim Read More …
The employer interim reconciliation for the transaction period 1 March to 31 August 2014 is open between 1 September and 31 October 2014. During this period you should submit your interim reconciliation declaration to SARS.
Author: Talita Laubscher (Bowman Gilfillan Africa Group) The Employment Tax Incentives Act, 2013 (EITA), was signed into law on 18 December 2013 as one of government’s responses to the persistently high rate of youth unemployment. The EITA seeks to encourage the employment of younger workers by allowing a reduction in the mandatory pay as you earn tax (PAYE) that is payable by employers to the South African Revenue Service (SARS), in respect of employees who qualify in terms of the Act. The EITA has, however, not been without controversy.
It is no hidden secret that unemployment in South Africa remains considerably high. According to the World Economic Forum Global Risk 2014 Report, structural unemployment and underemployment appears second overall in the Ten Global Risks of Highest Concern as many people in both advanced and emerging economies struggle to find jobs. The youth and minorities are especially vulnerable. Youth unemployment rates hover around 50% in some countries and South Africa was listed among them.
Formulas are sometimes difficult to understand so we have step-by-step examples and a handy ETI calculator. The examples and the ETI calculator are intended to help you work out your incentive amount which may be claimed. We draw your attention to the following: Disclaimer: What is contained in this calculator is intended as a guide only and is not considered to be a legal reference nor is it a binding ruling. The calculator does not take the place of legislation and readers who are in doubt regarding any aspect of the information displayed in the questionnaire should refer to the relevant legislation, or seek a formal opinion from a suitably qualified individual. More information Contact us It remains the responsibility of the employer to ensure the information provided, when using the ETI calculator, is accurate and the requirements are met for the employer and the employees to qualify. [spoiler title=”Example Read More …
The Employment Tax Incentive Act 26 of 2013 (ETI) was promulgated on 18 December 2013. The purpose of the ETI is to encourage youth employment and reduce unemployment, and will remain in place until 1 January 2017. The ETI came into operation on 1 January 2014 and will apply to qualifying employees employed on or after 1 October 2013 by eligible employers, which in effect means that the first claims for the incentive will be submitted with the January 2014 employees’ tax monthly return on or before 7 February 2014.