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PaySpace Experts Explain
WHY IS THERE AN ETI?
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Millions of young South Africans are excluded from participating in economic activity, and as a result suffer disproportionately from unemployment, discouragement and economic marginalisation. High youth unemployment means young people are not gaining the skills or experience needed to drive the economy forward. This lack of skills can have long-term adverse effects on the economy.
In South Africa, the current lack of skills and experience, as well as perceptions regarding the restrictiveness of labour regulations, make some prospective employers reluctant to hire the youth.
As a South African employer, you now have a great opportunity to boost the employment of young job seekers.
[/vc_column_text][/vc_column][/vc_row][/vc_section][vc_row mobile_bg_img_hidden=”no” tablet_bg_img_hidden=”no” woodmart_parallax=”0″ woodmart_gradient_switch=”no” row_reverse_mobile=”0″ row_reverse_tablet=”0″ woodmart_disable_overflow=”0″ css=”.vc_custom_1603444205050{margin-top: 25px !important;}”][vc_column][vc_message message_box_style=”solid” style=”square” message_box_color=”black”]The aim of the ETI is to facilitate the increased employment of young job seekers.[/vc_message][vc_column_text text_larger=”no”]
WHAT IS EMPLOYMENT TAX INCENTIVE (ETI)
The ETI is an incentive aimed at encouraging employers to hire young job seekers. It was implemented with effect from 1 January 2014.
WHAT ARE THE BENEFITS OF ETI
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WHO ARE THE EMPLOYERS THAT QUALIFY?
The employer is eligible to claim the ETI if the employer:
Is registered for Employees’ Tax (PAYE), or is eligible to register for PAYE (i.e. the employer cannot register just to claim ETI, other registration requirements must be met)
Is not in the national, provincial or local sphere of government
Is not a public entity listed in Schedule 2 or 3 of the Public Finance Management Act (other than those public entities designated by the Minister of Finance by Notice in the Gazette)
Is not a municipal entity
Is not disqualified by the Minister of Finance due to the displacement of an employee or by not meeting the conditions as may be prescribed by the Minister by regulation.
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HOW DO I DETERMINE WHO IS A QUALIFYING EMPLOYEE?
[vc_column_text text_larger=”no”]An individual is a qualifying employee if he or she:[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”1/4″]
Has a valid South African ID, Asylum Seeker permit or an ID issued in terms of the Refugee Act
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Was employed by the employer or an associated person to the employer on or after 1 October 2013 and
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Is not a “connected person” to the employer
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Is 18 to 29 years old (please note that the age limit is not applicable if the employee renders services mainly inside a special economic zone (SEZ) to an employer that is operating inside the SEZ
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Is paid the minimum wage applicable to that employer or if a minimum wage doesn’t apply, is paid the amount contemplated in the Minimum Wage Act and not more than R6 000 remuneration. If there is no prescribed wage regulating measure or not subject to or exempt from the requirements of the National Minimum Wage Act, a wage of at least R2 000 (where the qualifying employee was employed for 160 hours in a month) must be paid.
[/vc_column][/vc_row][vc_row][vc_column][vc_message message_box_style=”solid” style=”square” message_box_color=”grey”]There is no limit to the number of qualifying employees that an employer can hire.[/vc_message][/vc_column][/vc_row][vc_row css=”.vc_custom_1603374276878{background-color: #333333 !important;}” mobile_bg_img_hidden=”no” tablet_bg_img_hidden=”no” woodmart_parallax=”0″ woodmart_gradient_switch=”no” row_reverse_mobile=”0″ row_reverse_tablet=”0″ woodmart_disable_overflow=”0″][vc_column]
The value of the ETI the employer may claim depends on the value of the monthly remuneration paid to the qualifying employee. If the employee has worked less than 160 hours in the month, the remuneration amount must be ‘grossed up’ to 160 hours per month to calculate the value of the ETI. The amount can then be calculated and be ‘grossed down’ in the same ratio.
[/vc_column][/vc_row][vc_row][vc_column][vc_column_text text_larger=”no”]We hope you found this information useful. If you have any questions on how the Employment Tax Incentive (ETI) relates to payroll and the PaySpace system, please feel free to
get in touch with our support team.[/vc_column_text][vc_btn title=”Contact Us” style=”outline-custom” outline_custom_color=”#666666″ outline_custom_hover_background=”#666666″ outline_custom_hover_text=”#ffffff” shape=”square” size=”sm” align=”left” i_icon_fontawesome=”fas fa-angle-right” add_icon=”true” link=”url:http%3A%2F%2Fwww.payspace.com%2get-in-touch%2F”][/vc_column][/vc_row]
