ETI Refresher and Employer Reconciliation Recap

The calendar’s page has been turned over to November, which means that for the vast majority of you, the interim filing season is done and dusted! Our blog post today contains a refresher on ETI balances and the effect of tax periods on them, in addition to a polite reminder for any clients still to complete their filing.

Carrying Forward Unutilised ETI 

You may remember that as part of the Government’s response to COVID-19, ETI was adapted to increase both the number of eligible employees and the amount claimable per employee. Due to the scheme’s increased uptake, we thought it would be helpful to give you a brief refresher of some important points.

Under the rules that govern ETI, if your total ETI for a certain month is greater than your overall PAYE liability, you can have the balance rolled over to the following month(s). This roll-over is only allowed within any one six (6) month tax period – March to August and September to February, after which any unutilised ETI which you haven’t claimed as a payout from SARS is forfeited. As the extended COVID-19 ETI ran for the months of April to July 2020, these all fell within the last bi-annual filing period of March to August. Therefore, from August the usual roll over rules applied, meaning that any unutilised ETI is not rolled over, but should rather be claimed as a refund from SARS.

SARS has stated that despite the challenging circumstances brought about by the pandemic, these rules stand and that any ETI balance that you may have held will not be extended beyond the 31 August cut-off point. Despite this support measure no longer being available, we hope that the lesser restrictions means your business continues to regain a sure footing.

We’d also like to take this opportunity to remind you of the importance of correct and timely ETI submissions and claims, as the penalties for non-compliance can be severe. For more details, check out our ETI help pages.

Filing Reminder

Having gotten through another interim filing period, we hope that our continued endeavours to make payroll a breeze has made this filing season the smoothest yet for you! If you have not yet filed your EMP501 and IRP5 / IT3(a)s, the deadline was the end of October. We urge you to complete your filing as soon as possible, as the sooner you do this, the lesser the prospective penalty for late submission. If your EMP501 remains outstanding for several months, you could face a maximum penalty of 10% of the total amount of your employee’s tax deducted for the 2021 tax year.

If we can assist at all, please reach out to our support team who will assist you as best they can in resolving any issues you are facing with submission.

We hope that this information has proved useful to you. If you have any questions on how the information above relates to SimplePay, please feel free to contact us at [email protected]

Equally, if you are not yet a client of SimplePay but would like to be, why not check out our website? Or, better yet, try out our service for free with our 30-day trial, get acquainted with our user-friendly service by reading our getting started page, or take our free online course

Keep well and stay safe.

Team SimplePay

Reminder of ETI Minimum Wage Changes for May to July 2020

This is an important reminder that ETI should only be claimed if your employees earn at least the higher of the National Minimum Wage (NMW) applicable to them, or the wage specified by a wage regulating measure (e.g. a sectoral determination), if applicable.

During this time of crisis, more employers than ever are availing of the ETI scheme to help their finances. It is important to get it right, because the penalties can be steep.

You should only enable ETI for employees if you are sure they meet the higher of your sector’s wage regulating measure or the NMW. If your employees are working fewer hours than normal, but still meet the requirement per hour, it’s fine to claim ETI. If they are now earning less per hour than the minimum wage, ETI should not be claimed. Alternatively, if there is a single minimum wage applicable to all your employees, entering it under ETI settings will enable the system to automatically calculate 0 ETI for employees who do not qualify.

If you have not yet done so, you can update your ETI settings as described in this this section of our ETI help article. You can also find more on the COVID-19 ETI in this help article.

Please note that May’s payslips need to be unfinalised in order to effect the minimum wage change for May (if you had not already done so). We generally do not recommend unfinalising payslips as this can cause significant variances if regular items have been changed. Therefore, it is recommended that you take caution when doing this – ensure that you have saved a copy of all payslips, as well as the transaction history report for the period before unfinalising the payslips. You will then need to reconcile your new finalised payslips against the saved payslips used to pay employees.

It is important to note that there were minimum wage changes on 1 March 2020, as mentioned in this blog post.

If you have successfully applied for exemption from the NMW, and also do not have a minimum specified by a wage regulating measure, a minimum wage of R2000 per month could previously be used. However, effective 1 May 2020 to 31 July 2020, such employers no longer qualify for ETI at all.

Upcoming ETI changes for the May EMP201

The Second Revised Draft Disaster Management Bill was issued by the National Treasury on 19 May 2020. Although the bill provided a large amount of clarity, there were still a few parts that were unclear, which we were only able to finalise early this week. The revised bill made several important changes to the Employment Tax Incentive Act, which provides for further tax relief in respect of the COVID-19 pandemic. 

The SimplePay team is hard at work implementing these changes to our system. If you are claiming ETI for May, please do not finalise or submit your EMP201s yet. We will ensure that these changes are made in time for the 7 June EMP201 submission deadline and we will keep you updated when these changes are live.

We are also seeking clarity on how, if at all, these changes will affect the EMP201 submissions made in April.

We hope that this information proves useful to you. If you have any queries on how the above relates to payroll and the SimplePay system, please feel free to get in touch with our customer support team at [email protected].

Team SimplePay