Payroll insight
Remuneration per month
First twelve months
Second twelve months
R0–R2,000
50% of monthly remuneration
25% of monthly remuneration
R2,001–R4,000 R4,001–R6,000
Fixed at R1,000
Fixed at R500
Formula: X = A - (B × (C-D)) Where: X = tax rebate A = R1,000 B = 0 .5 C = monthly remuneration D = R4,000
Formula: X = A - (B × (C-D)) Where: X = tax rebate
A = R500 B = 0.25 C = monthly remuneration D = R4,000
ETI is more complex to administer from the payroll perspective because of the qualifying conditions which must be met in order to ensure the claim is compliant, but the funds are immediately available in most circumstances. (The ETI credit would be offset against the PAYE owed to SARS at the time of submitting the monthly EMP201/PAYE return. However, if the ETI credit is greater than the amount of the PAYE owed to SARS, this would result in a one-off reimbursement from SARS. The refunds only take place every six months after the tax filing period and after SARS has reviewed any documents they may request as part of their validation process.) ...more complex to administer from the payroll perspective because of the qualifying conditions which must be met... There are a number of conditions which employers must meet to qualify for ETI but the two which result in the largest cases of non-compliance relate to the
requirement that the employer must be ETI tax compliant on the day of submission of the ETI claim (EMP201 completion date) and that the claim can only be submitted in respect of ‘qualifying employees’ (see below). The employer also needs to be registered for PAYE, not be in government or be a public entity and must not have been disqualified as a result of not meeting the conditions or due to the displacement of an employee. A qualifying employee is an individual who: ● has a valid South African identity document, asylum seeker permit or an identity document issued in terms of the Refugee Act, and ● is between 18 and 29 years of age; (there are exceptions to the age requirement for employers operating in special economic zones and industries designated by the minister of finance), and ● is not a domestic worker ● is not a ‘connected person’ to the employer, and ● is employed by the employer (or an associated person to the employer) on or after 1 October 2013, and ● is paid a minimum wage of R2,000 per month (where they are employed for 160 hours in a month) and not more than R6,000 per month. (Where the employer is subject to wage regulating measures the
minimum wage may vary but may not be less than the minimum wage prescribed by the regulating measure.) Employers are prohibited from terminating the services of an existing non-qualifying employee in order to hire employees who meet the ETI requirements. The penalties for doing this are very severe and would also result in the employer becoming ‘disqualified’ for future ETI credits. ETI can only be claimed for a maximum of 24 months for each employee, with the ETI credit decreasing in value after the first twelve months. The value of the ETI credit, to which an employer will be entitled, can be calculated with reference to the Table. From 1 March 2015, hours are used to apportion ETI where the employee does not work a full 160 hours in a month. n Comment Unlike SDL where the employer needs to register, make a contribution and then to process a claim to receive part of the SDL payment back, ETI is available immediately. Therefore, it should be high priority for employers to ensure that they are claiming any ETI due to them and making full use of the assistance which the government has provided to tackle skills shortages and high youth unemployment levels.
25
Issue 26 | December 2016/January 2017
| Professional in Payroll, Pensions and Reward |
Made with FlippingBook Online document