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EMPLOYMENT TAX INCENTIVE (ETI)

EMPLOYMENT TAX INCENTIVE (ETI) EXPLAINED

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Qualifying employers will have to calculate and claim the incentive on a monthly basis. This amount must be completed on the Monthly Employer Declaration (EMP201), which was amended.
Remember you may only claim the EMPLOYMENT TAX INCENTIVE from the month of January 2014 for all qualifying employees employed from 1 October 2013. The amount which may be claimed must not be back-dated to October 2013. The ETI became effective 1 January 2014, and an employer is only eligible to receive the ETI from this date.
THE EXAMPLE BELOW HAS BEEN SET OUT TO EXPLAIN HOW EMPLOYMENT TAX INCENTIVE IS CALCULATED
Monthly RemunerationMin SIC Wage or R2000.00 First 12 months of EE’s employment Second 12 months of EE’s employment
R1 to R2 000 50% or monthly remuneration 25% of monthly remuneration
R2 001 to R4 000 R1 000 (fixed) R500 (fixed)
R4 001 to R6 000 R1000 – (0.5 x (monthly remuneration – R4 000)) R500 – (0.25 x (monthly remuneration – R4 000))
> R6 000

0

0

Example              

For weekly employees:

•             Total remuneration for the month (whether 4 or 5 weeks), check length of service and then use the

above table to calculate the ETI that could be claimed.

•             EE earns R750-00 per week and is in their first year of employment

•             Number of weeks in the month : 5

•             Total earnings for the month : R750-00 x 5 = R3750.00

Using the above table check which bracket the total monthly earnings falls within (R2001 – R4000) this will give a fixed amount of R1000.00

If the same employee earned R1000.00 per week and there were 5 weeks in the month – total earnings for the month would be R5 000-00.

Calculation : R1000.00 – (0.5 x (R500.00- R4000)) : R1000.00 – (0.5 x R1000,00 =R500) = R500.00 (first year)

R500 – (0.25 x (R5000 – R4000))  : R500 – (0.25 x R1000,00 = R250) = R250.00 (second year)

Monthly employees: the salary for the month would apply.

Criteria for ETI

Employers are eligible when

•             They are registered for the purpose of withholding and payment of employees tax

•             They are not part of the Government of RSA

•             They have not been disqualified from the Incentive by the Minister of Finance

•             All their tax affairs are in order (PAYE, VAT and Company Taxes)

Employees qualify for this scheme if the employee

•             Is not less than 18 years of age

•             Not more than 29 years of age at the end of any month in respect of the month that the ETI is being claimed                unless the employee is working in a SEZ (Special Economic Zone)

•             Is employed by an employer in an industry designated by the Minister of Finance

•             Is in possession of an ID document or an Asylum seeker permit

•             In relation to the employer is not a connected person

•             Is not a domestic worker

•             Was employed by the employer on or after 1st October 2013

•             Earns more than the minimum wage of his/her SIC. If no minimum wage defined then apply   minimum wage of R2 000.00

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