Additional Employment Tax Incentive (ETI) 2021

This blog is a follow up to our previous blog post dated 30 July 2021, regarding the Expanded ETI scheme being introduced by the National Treasury and SARS for the period of 1 August 2021 to 30 November 2021. 

On 12 August 2021, the National Treasury and SARS released draft legislation aiming to assist businesses in light of COVID-19 restrictions. Amongst other things, these Bills replicate the additional ETI that was rolled out in April 2020.  

The ETI relief eligibility requirements and benefits which are now being introduced will be very much the same as the ETI measures introduced in April 2020 and are discussed in the draft explanatory note released by SARS. In summary, the measures being introduced are:

  1. A R750 increase in the monthly maximum ETI allowable for qualifying employees.
  2. An expansion of the “qualifying employees” criteria to include employees who:
  1. no longer qualify due to their 24 months of ETI entitlement being exhausted;
  2. were ineligible due to having been employed before 1 October 2013; or
  3. were ineligible due to being aged between 30 and 65.
  1. The removal of the “gross up” calculation during this period for wages earned by employees working less than 160 hours per month. The requirement that ETI claimable must be “grossed down” is unchanged by the amendments.
  2. Monthly ETI reimbursements instead of bi-annual reimbursements for the duration of the Expanded ETI scheme (Aug – Nov).
  3. The introduction of an anti avoidance measure to limit abuse of the process where the employer tries to claim ETI after reducing the employee’s wage.

Important Points to Note:

Additional ETI Amounts

As in the previous ETI expansion in 2020, the amount of ETI claimable has been increased across the board by an amount of R750. As before, the ETI claimable for each employee may be adjusted on a sliding scale depending on the income range applicable to the employee. The effect of this change on each of the three income bands is discussed in detail on our Additional ETI (COVID-19) help page. 

Definition of Monthly Remuneration

The definition of monthly remuneration has been amended for this period by deleting the provision that it must be ‘grossed up’ if the employee’s ‘employed and remunerated’ hours for the month are less than 160.

The rationale for this is that many employees have been forced to work less hours during the recent lockdown and restricted work periods caused by the COVID-19 pandemic, and strictly applying the grossing up rule during this period would defeat the purpose of this relief

This also means that employees who previously did not qualify for ETI due to low ‘employed and remunerated’ hours may now qualify. 

Minimum Wage Qualifying Requirement

There is a Wage Qualifying requirement for employees to accrue ETI benefits which specifies that an employee must be paid the higher of:

  1.  the relevant national minimum wage;
  2.  An applicable industry wage regulating measure; or
  3. R2000.

Option C has been removed and does not have effect over this period, which means that an employer who is not subject to the National Minimum Wage Act and also does not abide by an industry set minimum wage, will not qualify for ETI at all during August to November 2021.

Extended Age Eligibility

In an aim to increase the number of employees who would qualify for ETI, the two age-related criteria are amended for the period August – November 2021. The result of these changes are that the following employees are now eligible to claim the Additional ETI: 

  • Employees aged 18 – 29 who no longer qualified for ETI as the full allowable 24 months of ETI had already been claimed;
  • Employees aged 18 – 29 who were ineligible as they were employed before 1 October 2013; and
  • Employees aged 30 – 65 who were ineligible due to their age and/or they were employed before 1 October 2013.

“Grossing down” of ETI Value

If an employee is employed for less than 160 hours in a month, the allowed ETI must be grossed down based on the ratio of ‘employed and paid remuneration’ hours to 160 hours. 

Monthly Reimbursement of ETI

To assist employer cash flow and as part of the relief provided by the Expanded ETI program, employers will be allowed to claim excess ETI at the end of every month from August 2021 to November 2021, as opposed to the usual twice per year.

The special ETI relief that potentially increases the total value of the ETI starts in August 2021, which is the last month of the current 6-month cycle.

Interim tax certificates for the 2022 tax year will therefore include one month (August 2021) of the enhanced ETI tax relief period. 

Now that employers could potentially have an increased ETI value for August, it is important to note that if the full ETI amount owing is not claimed as described above on the August EMP201 (due by 7 September 2021), any excess ETI owing to the employer will be forfeited.

At the end of this period, the normal 6-monthly ETI refund cycle will apply from the month after the end of the 2021 Expanded ETI relief period. 

SimplePay System Updates

In keeping with our aim and promise to keep you compliant, our team have implemented the updates required to apply the Expanded ETI rules retroactively to 1 August 2021 in time for the EMP201 deadline, being 7 September 2021. 

In order to claim additional ETI for your employees, you will need to have this set up on your company profile. To do this simple go to:

Settings → Payroll Calculations → Additional ETI (COVID-19) 

Note that the 2021 date range will automatically be selected and the Additional ETI calculated for you if you already had this set up on your profile and claimed additional ETI for your employees in 2020

Employers making use of the Additional ETI functionality for the first time will be required to set the Additional ETI date range and select ‘calculate’ in order to effect the Additional ETI for 2021.

Should you have any questions regarding our system and how to effect the above, please see our Additional ETI (COVID-19) help page or feel free to contact [email protected] for assistance.

Any further queries on details or implementation of the Expanded ETI rules can be directed to the SARS helpline on 0800 00 7277.

Keep well and stay safe.

Team SimplePay

ETI Relief Expansion and PAYE Deferral Announced, effective 1 August 2021

Recently businesses in South Africa have experienced numerous hardships and challenges to profitability and for some, their continued existence. As a beacon of hope and in an effort to give support and relief to those affected, National Treasury and SARS recently announced an intended R5 billion tax relief package. To relieve the economic strain being applied to businesses in South Africa currently, it was to be rolled out as soon as possible.

In today’s blog post we will look at the rapidly implemented tax relief campaign which has seemingly come to fruition over a number of days and is aimed at urgently assisting businesses during these tough economic times.

Tax Relief Measures and Effective Date

The statement issued by National Treasury briefly mentioned the intended tax relief packages, which was said to include:

  1. An expansion of the Employment Tax Incentive (ETI) for a period of four months; and
  1. A PAYE deferral for qualifying industries for a period of three months.

SARS announced in a media statement dated 28 July 2021, that the effective date of both the ETI relief and the PAYE deferral will be 1 August 2021. 

  • This will affect calculations in respect of the EMP201 declaration and payment which is due by 7 September 2021. 

The process was implemented quite swiftly as a way to assist the parties which were disadvantaged by the recent Level 4 Lockdown as well as the bouts of unrest targeting businesses in some areas. 

Please note that the changes have not been confirmed via actual government Bill or Amendment, at the time of writing and the information is still provisional at this stage. It is important to wait until the anticipated framework legislation on this is published, which government has said would be by mid-August 2021, as discussed below.

What are the requirements?

PAYE Deferral

The PAYE deferral will be available to industries deemed affected by SARS and this process will be dealt with directly by them. The exact list of affected industries has not been released at the time of writing this post, but we will provide an update on this as soon as more information is made available.

Any issues or queries you have around the deferral and qualifying industries should be directed to the SARS call centre on 0800 00 7277.  

Expanded ETI

Based on the information at hand it seems that the expanded ETI relief requirements will be very much the same as, if not identical to, the ETI relief measures which were introduced in April 2020.

This will most likely mean that there will be a R750 increase to the maximum monthly amount of ETI allowable for eligible employees. In addition to this, a further ETI will be available for employees who’ve exhausted their 24 month eligibility period, as well as those who previously did not qualify due to age or employment date. SARS has outlined how some of these changes may look in their media statement, here

If you are an employer who is intending to claim ETI, it could be wise to hold off on finalising payslips for the month of August 2021 to as late as possible in the month, until this confirmation is received. 

We can’t begin work on these changes until the official publication of the frameworks and as soon as this is released, we’ll begin work to immediately update our  system to ensure that the expanded ETI is incorporated into the August EMP201s, well before the submission deadline of 7 September 2021.

When will changes be confirmed?

It is widely expected that the required framework to outline and confirm the details of the relief will be issued sometime mid-August 2021.

We will notify all active SimplePay clients via system notification and will release blog posts on all further developments, as soon as we receive word.

Should you have any questions regarding SimplePay or any of our services, please feel free to contact [email protected] for assistance.

Keep well and stay safe.

Team SimplePay