07 Sep Employee Tax Incentive – ETI – An employer’s way to save every month
Employee Tax Incentive
SARS introduced the Employee Tax Incentive (“ETI”) to encourage the employment of young South African workers. Employer’s receive a tax incentive for each young individual that they employ under certain parameters:
- Younger than 30 years of age;
- The employee holds a South African ID number;
- Not a connected person to the employer (the employer’s son);
- Paid under R6000 per month with the sweet spot being between R2000 and R4000 per month for the employee.
Employer’s who have hired someone who fits the above criteria will receive a tax incentive that reduces their PAYE payable for each month. The tax incentive is set at R1000 per month for the first 12 months of employment and R500 for the next 12 months for that specific employee and can be claimed for multiple employees simultaneously.
The tax incentive of R1000 is pro-rated for:
- Part-Time work
- The amount above R4000 and below R2000 that the employer pays:
- If the employer pays R4500; the incentive is reduced to R750 per month
- If the employer pays R5000; the incentive is reduced to R500 per month
The Employee Tax Incentive is a great bonus for employing young South Africans and should be utilized by your company whenever possible. Contact us if your require any additional information or assistance.