Employment Tax Incentive (ETI)

The Employment Tax Incentive (ETI) is an incentive that was launched by SARS with the aim of encouraging employers to hire young job seekers, i.e. below 29 years old.  It was implemented with effect from 1 January 2014.

In order to claim ETI you must be ETI compliant on the day you submitted your ETI claim. This means that there may be no outstanding tax return for any tax type, nor must there be any tax amounts outstanding.

The benefits of the ETI are:

  • 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  Pay-As-You-Earn (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 February 2014 and earns R2000, will get R1 000 off
  • The aim of the ETI is to facilitate the increased employment of young work seekers.

Tax periods (months) from January 2014 to February 2019

The monthly calculated ETI amount per qualifying employee is determined as follows:

    • For the first twelve months of employment –
Monthly Remuneration ​​DeterminationMonthly Calculated ETI Amount​
​R0 – R2000​50% x monthly remuneration​R0 – R1000
R2001 – R4000​​Fixed at R1000​R1000
​R4001 – R6000​Formula: X = A – (B x (C – D))
X = monthly calculated amount
A = R1000
B = 0,5
C = Monthly Remuneration
D = R4000
​R 999 – R0
    •  For the second twelve months of employment –
​Monthly Remuneration​Determination​Monthly Calculated ETI Amount
R0 – R2000​​25% x monthly remuneration​R 0 – R499
​R2001 – R4000​Fixed at R 500​R500
R4001 – R6000​​Formula: X = A – (B x (C – D))
X = monthly calculated amount
A = R500
B = 0,25
C = Monthly Remuneration
D = R4000
​R499 – R0

Tax period (months) from March 2019

The monthly calculated ETI amount per qualifying employee is determined as follows:

    • For the first twelve months of employment –
Monthly Remuneration ​​DeterminationMonthly Calculated ETI Amount​
​R0 – R2000​50% x monthly remuneration​R0 – R1000
R2001 – R4500​​Fixed at R1000​R1000
​R4501 – R6500​Formula: X = A – (B x (C – D))
X = monthly calculated amount
A = R1000
B = 0,5
C = Monthly Remuneration
D = R4500
​R 999 – R0
    •  For the second twelve months of employment –
​Monthly Remuneration​Determination​Monthly Calculated ETI Amount
R0 – R2000​​25% x monthly remuneration​R 0 – R499
​R2001 – R4500​Fixed at R 500​R500
R4501 – R6500​​Formula: X = A – (B x (C – D))
X = monthly calculated amount
A = R500
B = 0,25
C = Monthly Remuneration
D = R4500
​R499 – R0

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