Xero Accounting Gold Champion Partner
We hope you enjoy reading the blog post.
If you want our team to do your accounting or tax for you click here.

SARS Employment tax incentive

SARS Employment tax incentive   1 January 2014 not only saw the dawning of a new year but also the implementation of a new SARS employment tax incentive. Maybe SARS is finally starting to understand what exactly it costs most small businesses out there to simply comply with its mammoth legislative requirements.

The thoughts behind this incentive scheme?

Millions of young South Africans are currently unable to participate 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.

Who qualifies?

  • The employer is eligible to receive the ETI if the employer‚Äď
    • Is registered for employees‚Äô tax (PAYE);
    • 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¬†displacement of an employee or by not meeting such conditions as may be prescribed by the Minister by regulation.
  • An individual is a qualifying employee if he or she‚Äď
    • has a valid South African ID;
    • is 18 to 29 years old (please note that the age limit¬†is not applicable if the employee renders services inside a special¬†economic zone (SEZ) to an employer that is operating inside the SEZ, or¬†if the employee is employed by an employer that operates in an industry¬†designated by the Minister of Finance;
    • is not a domestic worker;
    • is not a ‚Äúconnected person‚ÄĚ to the employer;
    • was employed by the employer or an associated person¬†to the employer on or after 1 October 2013; and
    • is not an employee in respect of whom an employer is¬†disqualified¬† to receive the ETI (i.e. the employee is paid below¬†the minimum¬†wage applicable to that employer or paid a wage below¬†R2 000 per month if a minimum wage not applicable).
Read Also:  Simplify Your Accounting Reporting with Syft Analytics: Thrive CFO's Expertise

Top tip: There is no limit to the number of qualifying employees that an employer can hire.

How does it work?

Employers will calculate and claim the incentive on a monthly basis. The employer must follow these steps:

  • Identify all qualifying employees in respect of that¬†month
  • Determine the applicable employment period for each¬†qualifying employee
  • Determine each employee‚Äôs ‚Äúmonthly remuneration.
  • Calculate the amount of the incentive per qualifying¬†employee as per the table below.

The EMP201 form was amended to include a field for claiming ETI effective January 2014. In determining the first or the second 12-month period, only the months in which the employee was a qualifying employee are taken into account. For example, the employee may be a qualifying employee in the first three months but not a qualifying employee in the fourth and the fifth months. If the employee is a qualifying employee in the sixth month, the sixth month is month number four as far as the 12-month period is concerned.

Monthly Remuneration

Employment Tax   Incentive per month during the first 12 months of employment of the qualifying employee

Employment Tax   Incentive per month during the next 12 months of employment of the qualifying employee?

R 0 РR2 000 50% of Monthly Remuneration 25% of Monthly Remuneration
R 2 001 – R4 000 R1 000 R500
R 4 001 – R6 000 Formula:R1 000 ‚Äď (0.5 x¬†(Monthly Remuneration ‚Äď R4 000)) Formula:R500 ‚Äď (0.25 x¬†(Monthly Remuneration ‚Äď R4 000))

Top tip: For the next biannual reconciliation submission process in 2014, the EMP501 and IRP5 will also be updated with the necessary fields.

How long will it be available?

The incentive is currently scheduled to end on 31 December 2016 but its effectiveness will be reviewed to determine whether to continue with the incentive.

Thrive CFO

Thrive CFO

Say goodbye to bookkeeping and hello to freedom - let us handle your accounting needs!

Want to know more?

Yes, tell me more!
Resource Centre
What our clients say?
Thrive CFO
Based on 5 reviews
powered by Google
Palabadi Ramaphoko
Palabadi Ramaphoko
19:38 15 May 23
I'm impressed with the work you do. You are extremely professional and polite. I hope we will grow big together!
Deidre Oosthuysen
Deidre Oosthuysen
12:20 04 May 23
I feel as though Thrive CFO is a natural part of our business. 100% professional. Very knowledgeable. Incredibly organised. And with a work ethic and proactive communication practices, I know I am in the very best hands possible.
Sean Fabian
Sean Fabian
07:45 04 May 23
As someone who has had the pleasure of working with Thrive CFO, I can confidently say that they are an exceptional company with an unwavering dedication to their clients. From beginning to end, their commitment to providing top-tier financial services is evident in every interaction.One of the things that sets Thrive CFO apart is their focus on education. They take the time to educate their clients on financial best practices and help them understand the reasoning behind their recommendations. This approach ensures that clients are empowered to make informed decisions about their finances.Thrive CFO also uses the latest technology to streamline their services and make the financial management process as efficient as possible. They utilize cloud-based software to provide real-time financial data and make it easy for clients to access their financial information at any time.Overall, Thrive CFO is an exceptional company that is dedicated to providing personalised financial solutions that help their clients succeed. If you're looking for a financial firm that truly cares about your success, I highly recommend Thrive CFO.
Michael Dawson
Michael Dawson
15:48 02 May 23
Great experience with the team! Always willing to assist with questions and able to help guide my small business to ensure that I am compliant.
Riaan Schlebusch ITMC
Riaan Schlebusch ITMC
12:15 21 Apr 23
Professional, smart and friendly people.You only deal with the best of the best, and they know how to answer your questions, and they ensure that they understand you, and make they make sure to take the time to know your business.
See All Reviews
Scroll to Top