Employment Tax Incentive (ETI) > ETI Management on SimplePay

This article outlines the steps for setting up, viewing and correcting ETI on SimplePay.

Setting Up ETI

You should follow the steps below to set up an employee for ETI on SimplePay:

Step 1: Set the minimum wage for the company

The system will use the wage regulating measure or minimum wage to check whether an employee qualifies for ETI. To configure these settings:

  • Go to Settings > Payroll Calculations > ETI (Employment Tax Incentive) 
  • Select ‘Monthly Amount’ or ‘Hourly Rate’ as the Minimum Wage Inputs
  • Enter the Minimum wage monthly and / or Minimum wage normal rate (hourly rate) based on the national minimum wage, minimum wage for that sector or the information in the wage regulating measure.
  • Enter the date that this minimum wage or wage regulating measure is Effective from*.
  • Click Save

*If you backdate the date entered into the Effective from field, ETI will be calculated for historic periods, which will need to be claimed or forfeited. More information on this is available in the following help article:

Filing and Processes > Monthly Submissions > ETI Corrections

Step 2: Check your Custom Items

If you have custom income, allowance or deduction items that are not copies of system items, you should ensure that these are set up correctly for ETI.

Income and Allowance Items

By default, all income and allowance items are excluded from the calculation of an employee’s Qualifying Wage. The Qualifying Wage is used to determine whether an employee qualifies for ETI – this is discussed further in the ETI article linked below. If an income or allowance item should be included in the calculation of an employee’s Qualifying Wage, please set this up as follows:

  • Go to Settings > Custom Items and select the relevant custom item that you previously created
  • Select the checkbox for Affects Wage for ETI Purposes
  • Click Save

Repeat the above steps until all previously created custom items that should be included in the Qualifying Wage calculation have been set up. If you create any new custom items after ETI has been set up, this checkbox can be selected while creating the custom item.

Note: 

It is recommended that you do not do hourly calculations off-system, i.e. do not use one of the first four input types when creating custom income or allowance items. Instead, you should use one of the last two input types – “Hourly rate * factor * hours” or “Custom rate * quantity” – so that the amounts can be included in the Qualifying Wage and the hours can be included in the actual hours employed, if applicable. The actual hours employed impact the grossing up of both the Qualifying Wage and Remuneration for ETI.

For more information on the Qualifying Wage calculation for ETI, please see the following help article:

Employment Tax Incentive (ETI) > Qualifying Wage

For more information on Remuneration for ETI, please see the following help article:

Employment Tax Incentive (ETI) > Calculating ETI

For more information on setting up custom items, please see the following help article:

Payroll Setup > Company Setup > Custom Items

Deduction Items

The amount of ETI that an employee qualifies for is based on their calculated ETI Remuneration. By default, all custom deduction items are treated as non-BCEA deductions which reduce ETI Remuneration. If a custom deduction item is considered a BCEA deduction or it should not reduce ETI Remuneration, this needs to be set up as follows:

  • Go to Settings > Custom Items and select the relevant custom item
  • Select the checkbox for Non-BCEA deduction (Do not deduct from ETI remuneration) Selecting this checkbox ensures the accurate calculation of ETI in line with the rules introduced on 1 March 2022.
  • Click Save

Repeat the above steps until all previously created custom items that should be included in the ETI Remuneration calculation have been set up. If you create any new custom items after ETI has been set up, this checkbox can be selected while creating the custom item.

For more information on Remuneration for ETI, please see the following help article:

Employment Tax Incentive (ETI) > Calculating ETI

For more information on setting up custom items, please see the following help article:

Payroll Setup > Company Setup > Custom Items

Step 3: Check each employee against the ETI criteria

SimplePay performs most ETI criteria checks. However, there are some manual checks that need to be done before enabling an employee for ETI.

For more information on the ETI qualifying criteria, see the following article:

Qualifying Employees

Step 3: Configure the ETI settings for each employee

The ETI settings for each employee must be configured on an individual basis. To do this:

  • Go to Employees and select the relevant employee
  • Click on Edit Info > ETI
  • Select an option from the Status dropdown menu:
    • Select “Qualified – claiming” if the employee meets all of the requirements as discussed above and you wish to claim ETI for this employee.
    • Select “Disqualified” if the employee does not meet the requirements for ETI.
    • Select “Qualified – not claiming” if you do not wish to claim ETI for this employee.
  • If you select “Qualified – claiming” as the Status, additional input fields will appear which need to be completed (see below)
  • Enter the Effective date that is applicable to the Status chosen.
  • Click Save.

Inputs Fields

Employee minimum wage inputs

  • Select ‘No override (use company setup)’ if the employee is subject to the same minimum wage as the company.
  • Select ‘Monthly amount’ if the employee is subject to a monthly minimum wage which is not the same as the company’s settings.
  • Select ‘Hourly rate’ if the employee is subject to an hourly minimum wage which is not the same as the company’s settings.

Employee minimum wage monthly

  • This only appears if you selected ‘Monthly amount’ from the Employee minimum wage inputs dropdown.
  • Enter the monthly minimum wage that is applicable to this employee.

Employee minimum wage normal rate

  • This only appears if you selected ‘Hourly rate’ from the Employee minimum wage inputs dropdown.
  • Enter the hourly minimum wage that is applicable to this employee.

Original Appointment Date

  • The date of first appointment is relevant in determining the number of months to be included in the maximum number of allowed months, i.e. 24. This will be taken into account when calculating the employees theoretical months.
  • Enter a date or leave this field blank:
    • If the employee started working for the company at an earlier date than the Appointment Date on their Basic Info page, enter the original date that they started working for the company.
    • If the employee previously worked for an associated person, enter the date that they started working for the associated company. For example, suppose an employee worked for Company A from 2020-09-01 until it merged with Company B on 2021-01-01. If Company B is on the system, the employee’s appointment date will be 2021-01-01. However, under ETI settings, you should enter 2020-09-01 as the Original Employment Date.
    • Leave this field blank if the Appointment Date should be used.

Months unclaimed before take-on year

Input the number of months that you didn’t claim ETI for a qualifying employee before you started using SimplePay.

NB: This input can only be used up until the August 2021 payslip and will no longer appear on payslips after this date. We have upgraded the system to include a new input called “Disqualified months before starting to use the system” which will be used for payslips from September 2021.

  • If a qualifying employee was employed for 12 months prior to the date that you started using SimplePay, but you only claimed ETI for 4 of those months, you should enter 8 as the Months unclaimed before take-on year.
  • If a qualifying employee was appointed on 1 March 2020 and you started using SimplePay in March 2021, the system will assume that ETI was claimed for those 12 months (March 2020 to February 2021). If that is not the case; for example, if you didn’t claim ETI for June and July 2020 for this employee, you should enter 2 as the Months unclaimed before take-on year.

Disqualified months before starting to use the system*

Input the number of months in which the employee was disqualified for ETI, only including the number of months of employment before you started using SimplePay. 

  • This will allow SimplePay to accurately calculate the number of ETI months which are to be transferred from the months of employment before you started using SimplePay.
  • If an employee was employed for 12 months before you started using SimplePay but only started qualifying for ETI 6 months after their original appointment date, you would input 6 as the Disqualified months before starting to use the system.
    • SimplePay will then adjust the applicable ETI months for that employee.
  • If this field is set to zero, SimplePay will presume that the employee qualified for ETI in all months of employment prior to you using the system.
  • You should not enter a value for this input unless you are 100% sure that there were months where the employee did not meet the qualifying criteria for ETI. Entering a value when that is not the case will result in overclaims of ETI.

*We have replaced the previously used “Months Unclaimed before Take On Year” with this field, which will appear on payslips from September 2021. The Months Unclaimed before Take On Year field was used to capture the qualifying ETI months that were not claimed by the employer before the Take On Year. 

Employee works in the same SEZ as the employer for more than 50% of the year (Applicable from March 2019)

Select the checkbox only if it is applicable.

Viewing ETI Calculations

Once the ETI settings have been configured, the system will calculate ETI on finalised payslips. There are a few ways to view the ETI calculated for employees:

ETI Report

You can see a breakdown of the amount of ETI calculated per employee per pay period in the ETI report.

More information on the ETI report is available in the following article:

Reports > ETI

EMP201

You can view the total ETI calculated for the month, the ETI brought forward from previous months, the ETI utilised against PAYE in the current month and the ETI carried forward to the next month by opening the EMP201 for the month in PDF or web view format.

More information about how the lines items for ETI relate to one another can be found in this article:

More information on what EMP201s are and how to access them can be found in this article:

Filing and Processes > Monthly Submissions > EMP201

ETI Breakdown and ETI Trace

The ETI Breakdown shows you the ETI calculated per employee for the month. To view the ETI breakdown, go to Filing. Then click on Web under the EMP201 heading for the month and click on the ETI figure calculated.

An ETI Trace is available for each employee whose ETI settings are configured to allow ETI. The ETI trace shows information on how the ETI for that employee is calculated or why their ETI is not calculated. To view the ETI Trace, click on the ETI amount next to the employee’s name in the ETI Breakdown.

Correcting ETI

If you made an error and over-claimed ETI or under-claimed ETI in a particular month, it should not be historically corrected, but rather corrected in the month when the error is discovered.

For more information on this, refer to the following article:

Filing and Processes > Monthly Submissions > ETI Corrections

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