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Got questions about the Employment Tax Incentive? Here are some of the answers

by , 12 March 2014
If you're confused about the Employment Tax Incentive, we've got you covered. Here are the answers to five commonly asked questions.

What you need to know about the Employment Tax Incentive

We're not quite done with the Employment Tax Incentive (ETI). Yesterday we gave you answers to your Employment Tax Incentive Act questions. Now we're going to give you more answers to help you comply with the Act.

#1: How do I determine if I'm an eligible employer?

In this article, experts at FSP Business explained that the employment tax incentive only applies to employers who are registered with SARS for Pay As You Earn (PAYE) purposes.

This means if you have a legal obligation to withhold and pay tax on behalf of your employees, through the PAYE system, you'll be eligible for the tax incentive.

Don't forget that the employment tax incentive is further limited to an eligible employer hiring a 'qualifying employee'.

#2: How does the employee tax incentive affect the Monthly Employer Declaration (EMP201) submissions?

Alan Lewis, a Tax Advocate and Independent Tax Consultant explains on the Accounting & Tax Club that for starters, as an employer, you are entitled to claim the sum of all incentives, for each month, as a deduction from the employer's employee's tax liability.

'If the sum of the incentives exceeds the employee's tax liability, the excess may be rolled over, and added to the sum of the incentives, which may be claimed in the following month.'

You must include the details of the incentives, which you claimed in the annual return. You can also claim any excess that still exists. This will be paid to you by the Commissioner.

Lewis adds that 'the limitation is that the excess which may be claimed in the month, which follows the end of the period for which the annual employee's tax return must be submitted, may not exceed R 6000 per employee.'


Finance and Payroll managers! In just three hours you'll know all the answers to:

  • What is the Employment Tax Incentive Act and how can I benefit?
  • Which employers qualify for the incentive and which employees should I employ to maximise my claim?
  • What are the anti-avoidance provisions that I must know?
  • How do I avoid being disqualified from receiving the employment tax incentive?
  • How do I calculate the amount of my employment tax incentive?
  • How do I claim my employment tax incentive?
  • When won't the employment tax incentive be available to me anymore?
  • How will the roll-over amounts and reimbursements affect my company?
  • How do the various Tax Acts all work together?
  • Are there penalties and how do I manage business risks associated with my claim?
  • What are the key business items I need to make on recruitment, policies, risk management to maximise the benefit?

Find the answer to these and many other questions about the Employment Tax Incentive Act in your copy of the Employment Tax Incentive Act DVD.


#3: If an employee is employed with a passport and work permit, but has no asylum seeker permit, do they still qualify for the incentive?

No. Only SA 13-digit ID, or asylum seeker permits are acceptable documents, says Sage Vip Payroll & HR.

#4: Has the EMP201 changed?

Yes, Sage Vip Payroll & HR says there's a new field where the ETI amounts can now be entered.

#5: Can the EMP201 have a negative amount?

SARS says that the Pay-As-You-Earn (PAYE) on the EMP201 may not result in a negative amount. Where the Employment Tax Incentive is more than the PAYE liabilty, a zero (0) must be completed in the Nett PAYE amount.

Well there you have it. If you have more questions on the Employment Tax Incentive, tax experts at the Accounting & Tax Club will answer them for you. Just click here.

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