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Five ways the Employment Tax Incentive Act impacts your HR department

by , 07 January 2014
The Employment Tax Incentive Act, also known as the Youth Wage Subsidy just came into effect on 01 January 2014. President Jacob Zuma signed it into law in December despite COSATU's objection to this bill.

The government wants to use this Act to promote employment for young people, and they're willing to give you a tax incentive if you employ young people under specific conditions in the Act.  But what does this law mean for you exactly? Let's take a look…

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Five ways the Employment Tax Incentive Act impacts your HR department
Firstly: According to the Act, young people or qualifying employees must be between the ages of 18 and 29 years old in the month you claim the employment incentive. This only applies to anyone you employed from 01 October 2013.

Secondly: This incentive doesn't apply to domestic workers and workers connected to or related to you. So you can't claim on these types of employees.

Thirdly: You must register for PAYE tax to receive this incentive. Companies not registered for PAYE don't qualify to receive this incentive

Two more ways the Employment Tax Incentive Act impacts your HR department
Fourthly: You mustn't fire your older employees and hire a younger one just to qualify for this incentive. If you do, you'll pay R30 000 to SARS for each employee you let go and the Minister of Finance will disqualify your company from receiving this incentive. And you'll stand in line for an unfair dismissal case.

Finally: According to the Treasury department, SARS will publish the details of how exactly this Act will benefit you. We'll give you this information when it becomes available.

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Until next time,
Yvonne Eribake

P.S. Do you know if you can claim the tax incentive on young temporary workers with this Act? Find out this and other burning questions you have at the FSP Business Employment Tax Incentive Act workshop this January. Book and pay before the 21 January 2014 and you'll get the early bird discount. That's 20% off your workshop price. Just email seminars@fsp.co.za for the details.

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