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How to hire employees and get SARS to pay their salary.

by , 22 June 2015
This probably sounds impossible to you. But yes you can expand your workforce and get SARS to pay a portion of their salary!


The employment tax incentive (ETI) is designed to help businesses expand their capacity and employ younger, less experienced generation of job hunters.


We'll show you how you can claim ETI, reduce your PAYE bill and get SARS to pay a portion of your employee's salary!

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Discover the 14 sections of the Employment Tax Incentive Act today.

Click here to get your copy of the Employment Tax Incentive Act DVD

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How does ETI benefit you?

You'll only benefit from the ETI if you fill positions with individuals who meet the specified criteria in the ETI Act.

If you and your employees meet the criteria, you'll reduce your monthly PAYE payment to SARS. ETI benefits you when you use it strategically:
  • ETI reduces the cost of hiring young people;
  • You'll reduce the amount of your PAYE bill;
  • You can claim ETI for a 24 month period for each employee; and
  • The ETI amount is based on the salary you pay to each employee.

Even if you don't pay PAYE, you can still benefit! SARS will reimburse you the total of your unclaimed ETI amount twice a year. Just submit your six month and annual EMP501 reconciliations.

Read on to learn how to calculate ETI.

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Attention Finance and Payroll managers
Do you know:
- How you can use the Employment Tax Incentive Act to your advantage?
- What the criteria is to qualify for a tax incentive so you can pay less tax?
- How to legally claim a tax incentive when you hire temporary employees?
- How to claim a tax incentive on learnerships?
- How to manage the risks and penalties involved with the Employment Tax Incentive Act?

Introducing the only way to get informed on all your Employment Tax Incentive Act obligations in just three hours and in the comfort of your own home or office

Click here.

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Calculate your ETI quick and easy

Follow these four steps on a monthly basis to calculate your ETI:

Step #1: Identify your employees who qualify for ETI
Step #2: Work out which employment period your employees fall under
Step #3: Work out each employee's monthly remuneration.
 
When you work out the remuneration amount to calculate ETI, if the employee is employed for:
  • 160 hours in the month - you must use the actual salary amount
  • Less than 160 hours in the month – you must gross up their salary to 160 hours per month to calculate ETI. Then once the amount is calculated and gross down in the same ratio.
For example:

Emerald Events has an employee, Thandi, who qualifies for ETI. Thandi is employed to work 80 hours a month and is paid R1 500. Her salary must be grossed up to 160 hours to check whether the amount falls within the wage requirements.

To determine the remuneration amount for 160 hours a month: 160/80 hours = 2
Actual remuneration received x 2: R1 500 x 2 = R3 000.

So Thandi's salary falls within the wage requirements.

Step #4: Calculate the amount of ETI per employee.

The amount you claim for employee depends on how much you pay them.

For the first 12 months, the monthly value of ETI per employee is:
  • 50% of monthly remuneration if less than R2 000;
  • R1 000 for monthly remuneration from R2 000 to R4 000; and
  • R4 001 – R6 000. Use the formula: R1 000 – (0,5 x (monthly remuneration – R4 000)).

For the following 12 months, the monthly value of ETI is:
  • 25% of monthly remuneration if less than R2 000;
  • R500 for monthly remuneration from R2 000 up to R4 000; and
  • R500 – (0.25 x (monthly remuneration – R4 000)) from R4 000 up to R6 000.

And best of all there's no limit to the number of qualifying employees that you can hire!

ETI means you have the perfect opportunity to employ young people in unfilled jobs. While you reap the benefits of having SARS pay a portion of their salary!

P.S. 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 to answer your question.


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