The Employment Tax Incentive (ETI) is designed to encourage employers to hire young and less experienced workers by providing them with financial relief. In this guide, we’ll take you through the straightforward process of applying for the ETI and the benefits it could bring to your business.

What is the Employment Tax Incentive?

The ETI is a government initiative aimed at reducing the cost of hiring employees for businesses in South Africa. It serves as a tax break that allows eligible employers to claim back a portion of the salaries they pay to qualifying employees. This incentive is especially beneficial for companies looking to grow their workforce while managing costs.

Who Qualifies for the ETI?

To qualify for the ETI, both the employer and employee must meet specific criteria:

• Employers: Must be registered with the South African Revenue Service (SARS) and must be compliant with tax obligations.
• Employees: Must be between 18 and 29 years old, be employed for a minimum of 160 hours per month, and earn a minimum wage as set by law.

Step-by-Step Process to Apply for the ETI

Step 1: Register with SARS

Before you can apply for the ETI, ensure that your business is registered with SARS. You'll need a valid tax number and must be compliant with tax submissions.

Step 2: Verify Employee Eligibility

Confirm that the employees you wish to claim the incentive for meet the age and employment requirements. Gather necessary documentation to prove their employment and eligibility.

Step 3: Calculate the Incentive Amount

Determine the amount you can claim for each eligible employee. The ETI is calculated based on the number of months the employee has been employed and their monthly remuneration.

Step 4: Claim the ETI through your Payroll System

Integrate the ETI calculations into your payroll system. When processing your Pay-As-You-Earn (PAYE) submissions, include the ETI claims within the EMP201 returns.

Step 5: Submit Your PAYE Returns

File your PAYE returns, ensuring that the ETI claims are accurately reflected. This includes both the monthly electronic submissions and the year-end reconciliation (EMP501).

Benefits of the Employment Tax Incentive

Implementing the ETI in your business can lead to multiple advantages, including:

• Cost Savings: Reduced payroll costs allow for increased hiring and investment in growth.
• Job Creation: Encourages businesses to create job opportunities for young individuals entering the workforce.
• Support for Economic Growth: By hiring more employees, businesses contribute to reducing unemployment rates in South Africa.

Conclusion

The Employment Tax Incentive is not only a chance for businesses to ease their hiring costs but also a means to empower young employees. By following the steps outlined in this guide, you can take full advantage of this incentive and contribute to South Africa’s growing economy. If you have any further questions or need assistance with the application process, don’t hesitate to contact our experts at Prebo Digital!