For those of you who aren't aware of the Employee Tax Incentive (ETI) then read on. Before we go into the nitty gritty of the ETI, I have read that it will be extended beyond February 2019. It is critical to the success of the YES, which in itself is somewhat dependent on our communist leader, bolshie bob, publishing an amendment that actually encourages companies to make use of it (we sit in hope - history doesn't favour this though).
The ETI is also a very positive incentive for skills development. We have figured out a way to get almost all the points for skills development using the ETI and for far less financial consideration than bolshie bob's ludicrous 6% of payroll. Call me and I'll tell you more - remember, all the points for a fraction of the money.
Back to the ETI - courtesy of SARS (the link is above).
Why is there an ETI?
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 work seekers.What is it?
The ETI is an incentive aimed at encouraging employers to hire young work seekers. It was implemented with effect from 1 January 2014.What are the benefits for employers?
The benefits of the ETI are:
- It will reduce the employers cost of hiring young people through a cost-sharing mechanism with government, by allowing you to reduce the amount of Pay-As-You-Earn (PAYE) you pay while leaving the wage received by the employee unaffected.
- For example, employers who are registered for PAYE, and who employ a person for the full month of February 2014 and earns R2000, will get R1 000 off their monthly PAYE liability (provided that the employee is a qualifying employee based on all the other remaining requirements). For more information on how the ETI works, click here.
- Employers will be able to claim the incentive for a 24 month period for all employees who qualify. Click here for more information.
- The incentive amount differs based on the salary paid to each qualifying employee and whether the qualifying employee was employed after the inception of the ETI programme on 1 October 2013. ETI may only be claimed for a total of 24 qualifying months. Click here for more information.
- This incentive will complement existing government programmes with similar objectives e.g. learnership agreements.
- The aim of the ETI is to facilitate the increased employment of young work seekers.
Who qualifies?
- The employer is eligible to claim the ETI if the employer–
- Is registered for Employees’ Tax (PAYE), or must be eligible to register for PAYE (e.g. the employer can't 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.
Top Tip: To work out if you are a qualifying employer click here.How do I determine who is a qualifying employee?
Top Tip: There is no limit to the number of qualifying employees that an employer can hire.An individual is a qualifying employee if he or she–
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Has a valid South African ID, Asylum Seeker permit or an ID issued in terms of the Refugee Act
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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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