What does the new Employee Tax Incentive Bill mean for your business?
Unemployment is a big problem in South Africa. So it's no wonder that government has finally stepped in to reverse the high levels that affect the youth. How? By making sure its new Employee Tax Incentive Bill comes into effect. And it will, the minute 2014 ushers in. Here's what you need to know about it...
According to a report on The HR Portal, the Employee Tax Incentive Bill is one of many programmes that falls under the umbrella of government's youth employment strategy.
Essentially, it 'proposes a youth wage subsidy aimed at encouraging employers, through tax incentives, to create job opportunities for young people,' explains the site.
Sounds great, and, on the surface, it is. But many leading experts are worried it'll lead to employment bias as the tax incentive is only available if you employ people aged 18 to 29 years old.
After all, as an employer, you'll be able to deduct the incentive amount for which you qualify from the employees' tax you'd normally have to pay SARS, adds Fin24.
Will your new employee qualify for this tax incentive?
Reports suggest that qualification is two-fold. First, your company must qualify and then so must your employee.
Do you qualify under the Employee Tax Incentive Bill?
As accsys.co.za explains:
Employers who are registered to withhold and pay employees tax qualify for this tax incentive as long as they're not:
Local, provincial or national government
Public entities (Public Finance Act of 1999), although the Minister of Finance may designate exceptions
Employers found to have displaced employees in order to benefit from the incentive
Non-compliant with the training conditions (as yet unspecified)
Failing to meet the conditions based on the classification of trade (SIC)
In trouble with SARS on the last day of the month
In addition, your employee only qualifies if:
His employment date is October 1st 2013 or later
He's between 18 and 29 years old on the first day of the month and not yet 30 on the last day of the month
He has a South African Identification Card (Act No 68 of 1997)
He has formal Asylum Seeker document (Act No 130 of 1998)
The company has an office in a Special Economic Zone (SEZ), and the employee (of any age) renders the majority of his/her services in that zone
He's employed in special industries, that are yet to be designated by the Minister of Finance in consultation with the Ministers of Labour and Trade and Industry
Stay tuned. As more information about the working of the Employee Tax Incentive Bill comes to light, we'll be sure to bring it to you.
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