ETI is aimed at reducing youth unemployment by providing a tax incentive to employers who hire young workers aged 18 to 29. It was meant to end on 28 February 2019, with no further tax credits being granted. However, towards the end of 2018 it was confirmed that, due to the success of ETI, it would be extended until 2029.
As of 1 March 2019, the ETI remuneration brackets have also been amended to account for inflation. Employers must still pay employees who work 160 hours per month a minimum of R2 000 in order to claim ETI. However, the maximum that employees can earn and still qualify for ETI has now increased to R6 500 (from R6 000). As a result of this increase, the R2 001 – R4 000 bracket has also been amended. Employers can claim a R1 000 tax credit per month for the first 12 months for employees earning R2 000 to R4 500.
The new remuneration brackets are as follows:
|ETI monthly tax credit |
in first 12 months
|ETI monthly tax credit |
in second 12 months
|R2 001 – R4 500||R1 000||R500|
|R4 501 – R6 500||R1 000 – [0.5 x |
– R4 500)]
| R1 000 – [0.25 x |
– R4 500) ]
As always, we take the hassle out of payroll for you and have already updated the system to reflect these changes.
If you have any questions regarding ETI, read more on our help page here. Alternatively, contact our friendly support team.
In an effort to address wage inequality and stimulate economic growth, president Cyril Ramaphosa signed the national minimum wage bill into law last month.
The National Minimum Wage Act stipulates that the minimum wage is to be administered on an hourly basis and is set at R20 per hour. This minimum wage will be effective from 1 January 2019.
This means that the hourly rate will need to be changed for employees who are currently earning a wage lower than R20 per hour. To review or edit the hourly rate for employees, go to Employees > Bulk Actions > Regular Inputs and select “Basic Salary” and “Hourly Paid” under Filters.
Remember that a change in the ordinary hourly wage will also impact the rate for Sunday pay and public holiday pay. For more information on these, refer to our help page here.
Impact on ETI
The ETI Act states that when there is no “wage regulating measure”, the minimum wage to qualify for ETI is R2 000 per month. SARS has confirmed that the national minimum wage does not count as a wage regulating measure and the R2 000 minimum stands. However, the national minimum wage should ensure that employees will meet this minimum anyway.
Proposals have been made by professional bodies to amend the ETI Act to clarify this and to replace the R2 000 minimum on ETI with a use of the national minimum wage, but this potential change has not yet been approved.
If you have any further queries regarding the impact of this Act on your payroll and on the system, please do not hesitate to contact us.
As from 1 August 2018, the criteria for employees who qualify for ETI have been amended for those working in Special Economic Zones (SEZs).
What are Special Economic Zones (SEZs)?
Special Economic Zones (SEZs) within South Africa are geographically designated areas set aside for specifically targeted economic activities to promote national economic growth and export. This is achieved through support measures to attract foreign and domestic investments and technology. The 6 SEZs are:
- Dube Trade Port
- East London
- Saldanha Bay
- Richards Bay
If employers and employers work within a SEZ there is no longer an age limit for employees who qualify for ETI. For the age qualifying test to fall away, the following two requirements must be satisfied:
- The employer must have a fixed place of business within one of the 6 designated SEZs, and
- The employee must render services to that employer mainly within a SEZ.
If you operate within a SEZ and would like to apply these changes on SimplePay, check out our updated ETI help page here.
As always, we are doing our very best to make your life simpler and save you time – therefore, increasing your efficiency.
In the past, you might have had to do manual journals in Xero to account for ETI Utilised because ETI is not included in payslips and, consequently, is not posted as part of the posting of other payroll information.
We are happy to inform you that you will no longer need to do these manual journals because of a new feature that we have introduced. Accounting for ETI Utilised (as per your EMP201) in Xero, will now be as easy as clicking a link in SimplePay.
More information about this very useful and time-saving feature is available on our help site. You might want to look at the section about the Cutoff Date, in particular, to ensure that you use the new feature only from the month that suits you.
If you have any questions, you are welcome to email us at [email protected] to assist you.
The SimplePay Team
We’re proud to announce we’ve now incorporated support for ETI (Employment Tax Incentive, a.k.a. Youth Wage Subsidy) in the system. You can (and should) read more about it in the Employment Tax Incentive section of our online help.
If you’ve already submitted your EMP201 for January but have employees that qualify for ETI, we’d suggest submitting an amended EMP201. If you’ve finalised the January EMP201, you should see a newer draft version on the Submissions tab, but only if the system calculated ETI for Jan.