What The New Employment Tax Incentive Limits Mean for Your Business
During Finance Minister Enoch Godongwana’s 2022 Budget Speech, a substantial 50% increase in the limits for the Employment Tax Incentive (ETI) was announced, effective from 1 March 2022. This will increase the amount of tax relief employers can claim when employing young people.
ETI fast facts
- An incentive encouraging employers to hire young work seekers aged between 18 and 29 years.
- Reduces the employer’s cost of hiring young people through a cost-sharing mechanism with government.
- Can be claimed for a 24 month period for all employees who qualify.
- Came into effect on 1 January 2014 and will end on 28 February 2029.
- ETI is claimed by reducing the amount of Pay-As-You-Earn (PAYE) due by the company, leaving the wage received by the employee unaffected.
As the monthly remuneration increases, the amount of the rebate reduces: at the upper limit with a monthly remuneration of R6 400, the monthly rebate is R750.
Even so, especially for companies with many employees, these rebates will add up on a monthly basis, and stack up over two years. There is no limit to the number of qualifying employees that you can hire.