Employment Tax Incentive Revisited in National Payroll Week

National Payroll Week has focused +Accsys (Pty) Ltd  on all things payroll.

I sat down to talk to Cathie Webb, our Chief Operations Officer, who is a director of South African Payroll Association (SAPA), as well as on the executive of the Payroll Author’s Group (PAG).

Having published articles and blogs on the Employment Tax Incentive (ETI) bill last year, I thought it would be a good idea to discuss this with Cathie.

She confirms that, in late 2013 when the Minister of Finance approved the ETI Bill, it was designed to encourage business to employ youth, and to supplement the pool of employable and skilled workers available in South Africa.

Cathie says “The ETI allows business to reduce their PAYE burden according to a formula which incentivises employment of people earning under R6000 per month.  According to SARS, in the first month of implementation, 56 000 new jobs were created*”.

“As this number may include interns, who would have formed part of this group anyway, the exact amount of new jobs may not be this amount, but if even half this number is accurate, it will have a long-term positive impact on the South African business scene, and give hope to thousands for a meaningful working future.”

In Cathie's dual roles in Accsys and SAPA, she says that both are of the opinion that this is a great opportunity for businesses to beef up their Payroll Departments with extra hands.  We often hear how the Payroll Department is understaffed, how (particularly) wages administrators cannot go on leave”

She shared that she knows of one company deciding to move their payroll solution into the cloud, so that the administrator could continue to process wages while on honeymoon!

We both agree that taking on an intern means that one has the chance to share skills, develop someone into the perfect payroll team member, and government pays the business to do this!

Formal training programs are available to assist, which gives the intern a formal qualification, and the opportunity to recover costs from the relevant SETA.

There are still some practical questions to do with the calculation and reporting of ETI which need to be addressed, namely:

• Should a qualifying employee be sent to a company by a Labour Broker, which company claims the ETI incentive, the employer or the Broker?  In our view, the Broker is the actual employer, and should be making the claim;
• Dealing with casuals who work part of a month.
•  Managing part time workers who are employed by associated companies.  For example, if the employee works for company A in June (ETI month 1) and the second half of June in company B (also ETI month 1), his second month at company B should be counted as ETI month 3.
• Managing the ETI history for employees in general.

These concerns are amongst those being investigated by SARS, and we have hopes that a guide to ETI best practice will be forthcoming.

Thanks to Cathie for spending her valuable time with me.   We will be discussing the new Retirement Reform this week, too.

National Payroll Week - 30th June to 4th July, 2014

Links, References and Notes

Payroll Qualification
Business Connexion:Accsys

email:      tschroenn@accsys.co.za or cwebb@accsys.co.za

twitter:   @TerylSchroenn or @CatiWeb

* Minister of Finance Pravin Gordhan – 2014 Budget Speech (page 12)

Note

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