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Employment Tax Incentive Bill (ETI) - Q & A (3)

The last part of the article on ETI, and we are still waiting for some finalisation, which I will post when I receive it.

How does an employer deal with part pay periods?


The incentive must be pro-rated to match the calculation of remuneration.  For example, if an employee starts on the 15th of the month, and earns R2000 in the first month with the company:
His remuneration must be grossed up to R4000 per month
The ETI on this value calculated (R1000 in the first 12 qualifying months of employment)
This results in a R500 ETI for the employer on this employee for this month

Does it run for 24 Months from Date of Employment?


Confirmation of this is required, but it appears that the Employer may claim for each employee for up to 24 months, even if they are not consecutive (ETI qualifying months, not months of employment)

What happens if an employee leaves the organisation?

Assuming all other qualifying factors are in place
The next employer can start counting ETI qualifying months from the first month of employment, i.e. the employees first ETI month will be counted as month 1 for the new employer
If the employee goes to an “associated company”, previous ETI months must be taken into account
If the employee returns to the first company after an interruption in service, the company must start counting ETI months from where they left off when the employee was disengaged

What happens if the ETI is greater than PAYE?


The unclaimed amount may roll over to the following month
Note that these unclaimed amounts must be cleared every 6 months, aligned with the tax reporting periods.
It may not exceed R 6000 per qualifying employee (otherwise it would not have been cleared in the previous period.
There are still outstanding issues to be finalised before rolling out the Employment Tax Incentive, but the EMP 201 will now include ETI.

How will ETI be verified by SARS?


Employers must be able to prove their calculation of ETI in terms of each employee
Details of file submissions to SARS are still being finalised
It is currently assumed that these will be aligned with the bi-annual IRP5 reporting periods


Links and References

Trading Economics
Legal Brief
Acts online News
SARS
Employee Tax Incentive Bill
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