The Employment Tax Incentive (ETI) is a government incentive that reduces the amount of PAYE an employer pays over to SARS for each qualifying young employee, without reducing the pay the employee actually receives.
What it means
The incentive exists to lower the cost of hiring young, less experienced workers and encourage employers to take them on. The employer keeps the difference between what would normally be due as PAYE and the reduced amount, while the employee's payslip and net pay are unaffected.
Where it fits in
ETI is calculated per qualifying employee per month, based on age, remuneration and wage-regulating measure status, then netted off against the employer's total PAYE liability on the EMP201. It is reconciled annually on the EMP501 alongside ordinary PAYE.
Key rules
- Employee must be between 18 and 29 years old (no upper age limit for employees in a Special Economic Zone) and hold a valid South African ID, asylum permit or refugee status as required.
- Remuneration must meet either the National Minimum Wage or an applicable wage-regulating measure for the incentive to apply.
- Available for a maximum of 24 qualifying months per employee.
- Reduces the employer's PAYE payment, not the employee's taxable income or net pay.
