Deadline aside, companies can really benefit from Employment Tax Incentive


Johannesburg, 22 Aug 2018
Sandra Maritz, Legislation Business Consultant at CRS Technologies.
Sandra Maritz, Legislation Business Consultant at CRS Technologies.

While there is no certainty regarding the proposed five-year extension on the Employment Tax Incentive (ETI) programme (as directed by the 2018 Draft Taxation Laws Amendment Bill), companies will benefit financially from implementing ETI, and CRS Technologies can serve as a trusted solutions partner.

ETI took effect from 1 January 2014 and was introduced as an incentive to encourage employers to hire young work seekers between the ages of 18 and 29.

It was set to expire on 31 December 2016. The Taxation Laws Amendment Act, 2016, extended the deadline for ETI to 28 February 2019.

HR and HCM services and solutions specialist CRS Technologies reminds employers they can claim back on ETI depending on the value of the monthly remuneration.

The employer can claim the ETI and reduce the amount of pay as you earn (PAYE) tax payable by the amount of the total ETI calculated in respect of all qualifying employees.

Other benefits include:

* 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 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 July 2018 and earns R2 000, will get R1 000 off their monthly PAYE liability (provided that the employee is a qualifying employee based on all the other remaining requirements).

* 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

So there is certain return on investment (ROI) for qualifying employees, but one of the reasons for business apprehension regarding the programme is because of the level of complexity in calculating cost and ROI regarding ETI.

There are also specific criteria covering qualification for employers and employees alike to the programme.

In order to qualify, the relevant employer must be registered for Employees' Tax (PAYE), or must be eligible to register for PAYE. The employer can't register just to claim ETI; other registration requirements must be met.

Certain employers are specifically excluded from the benefits of the ETI, even if they are registered employers for employees' tax purposes.

These employers are:

* The government of the republic in the national, provincial or local sphere.

* A public entity that is listed in Schedule 2 or 3 of the Public Finance Management Act 1 of 1999, other than those public entities that the minister may designate by notice in the Government Gazette on such conditions as the minister may prescribe by regulation.

* A municipal entity.

Qualifying employers can also be 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.

"CRS is one of the very few payrolls that can calculate this correctly and has the resources and expertise to fulfil all requirements for employers within its payroll system," says Sandra Maritz, Legislation Business Consultant at CRS Technologies.

CRS Technologies

CRS Technologies is an established national provider of solutions and services to the growing human resources (HR) and human capital management (HCM) industries.

CRS Technologies began operations in 1985 and quickly established itself as a technology solutions house with all the skills and resources required to help clients manage HR, people management and payroll administration, among other disciplines.

The company is based in Johannesburg, South Africa, and fully invested in Africa's labour market, from both an employer and employee perspective.

The business offers best-of-breed solutions that centralise, streamline and harmonise what are otherwise disparate functions.

Its innovation is based on the principle that in order to be of value, it must be reliable, easy to use and understand, and actually remove the complexities of people optimisation in the workplace.

CRS has established itself as a leader in the market, underpinned by the offer of an HR platform that provides seamless integration capabilities to multiple platforms and ERP systems.

It maintains a close eye on developments in legislation and other labour-related trends that impact HR and HCM, and its mandate is to inform clients of these changes and how they will influence markets going forward.

Editorial contacts
Rubicomm (082) 340 2876 info@rubicomm.co.za
CRS Technologies (+27) 11 259 4700 berniceh@crs.co.za
Have your say
Facebook icon
Youtube play icon