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Revealed: Commencement and cessation of the employment tax incentive

by , 17 December 2013
In an effort to lower the high levels of unemployment in South Africa, government has adopted the Employment Tax Incentive Bill. With this Bill, government wants to encourage employers, through tax incentives, to create job opportunities for 'qualifying employees'. Read on to find out when the employment tax incentive will be introduced and when it'll come to an end.

You probably know that the Employment Tax Incentive Bill has been adopted by the National Assembly. But, do you know when government plans to introduce the incentive?

The employment tax incentive will be implemented from 1 January 2014 to 31 December 2016.

The South African Institute of Tax Practitioners explains that in order to avoid a situation in which employers delay hiring young job seekers until 1 January 2014, and to maximise their ability to benefit from the incentive, it's proposed that the incentive apply to all qualifying employees hired after 1 October 2013.

The proposed incentive will cease after 1 January 2017 and incentive amounts not deducted from PAYE as at 31 December 2016 will be forfeited, says the Institute.

The employment tax incentive will be introduced in phases.

The first phase of the incentive will be based on the existing tax administration platforms.

Thereafter, National Treasury and SARS will review the effectiveness and the impact of the incentive and a decision on its future will be made in 2016.

Only after the initial review of the incentive will the second phase be introduced. The second phase of the incentive will include additional policy features and will possibly be a refinement of the first phase.

The South African Institute of Tax Practitioners says the implementation of the incentive will hopefully stimulate the demand for young, inexperienced job seekers to address some of the issues and consequences of youth unemployment in South Africa.

Statistics show that 24.70% people are unemployed in South Africa.

Remember, the Bill proposes that the employment tax incentive apply only to employers that are registered with SARS for PAYE purposes.

Now that you know when the employment tax incentive will be introduced and when it'll cease, make sure you comply.

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