The ETI is an incentive aimed at encouraging employers to hire young work seekers. It was implemented with effect from 1 January 2014.

What are the benefits for employers?

The Employee Tax Incentive will reduce the employer or sponsor’s cost of hiring young people through a cost-sharing mechanism with government. This will allow you to reduce the amount of Pay-As-You-Earn (PAYE) you pay while leaving the wage received by the employee unaffected.
Employers or sponsors will be able to claim the incentive for a 24-month period for all qualifying employees. Click here for more information.

This incentive will complement existing government programmes with similar objectives, e.g. Learnership Agreements.

Who qualifies?

The employer is eligible to claim the ETI if the employer:

• Is registered for Employees’ Tax (PAYE), or is eligible to register for PAYE (e.g. the employer can't register just to claim ETI, other registration requirements must be met).
• Is not in the national, provincial or local sphere of government.
• Is not a public entity listed in Schedule 2 or 3 of the Public Finance Management Act (other than those public entities designated by the Minister of Finance by Notice in the Gazette).
• Is not a municipal entity.
• Is not disqualified by the Minister of Finance due to the displacement of an employee or by not meeting the conditions as may be prescribed by the Minister by regulation.
  Who is a qualifying employee?
• Has a valid South African ID, Asylum Seeker permit or an ID issued in terms of the Refugee Act.
• Is 18 to 29 years old (please note that the age limit is not applicable if the employee renders services mainly inside a special economic zone (SEZ) to an employer that is operating inside the SEZ).
• Is not a domestic worker.
• Is not a “connected person” to the employer.
• Was employed by the employer or an associated person to the employer on or after 1 October 2013.
• Is paid the minimum wage applicable to that employer or if a minimum wage doesn't apply, is paid the amount contemplated in the Minimum Wage Act and not more than R6,000 remuneration. If there is no prescribed wage regulating measure or not subject to or exempt from the requirements of the National Minimum Wage Act, a wage of at least R2,000 (where the qualifying employee was employed for 160 hours in a month) must be paid.

Please note: The value of the ETI the employer may claim depends on the value of the monthly remuneration paid to the qualifying employee. If the employee has worked less than 160 hours in the month, the remuneration amount must be ‘grossed up’ to 160 hours per month to calculate the value of the ETI. The amount can then be calculated and be ‘grossed down’ in the same ratio. Click here for more information.