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South Africa Reminds Employers Of Tax Refunds For New Hires

by Lorys Charalambous, Tax-News.com, Cyprus

07 October 2014


The South African Revenue Service (SARS) has reminded employers that the legislation that set up the Employment Tax Incentive from January 1 this year also includes a refund process.

The process, which SARS intends to set up in the fourth quarter of 2014, will refund employers the amount of their allowable ETI that was not used to reduce the tax amount payable at the end of each six-month reconciliation period (March 1 to August 31, and September 1 to February 28 or 29).

An ETI refund will only be paid if an employer is tax compliant. An employer is tax compliant if they have submitted all tax returns and they have no outstanding tax debt at the time when employer reconciliation documents are received and processed by SARS.

However, an employer will have six months from the start of the next reconciliation cycle to correct any non-compliance and still be able to receive the ETI refund, If the employer does not become compliant by the end of the next six-month reconciliation period, the ETI refund will be forfeited.

The ETI functions by decreasing the amount of pay-as-you-earn tax that is payable to SARS for every qualifying employee that is hired by the employer. Employers can claim the (maximum 50 percent) ETI on a sliding scale for any employee between the ages of 18 and 29 who possesses a South African ID, was employed by the employer on or after October 1, 2013, and is receiving a monthly salary that is, generally, less than ZAR6,000 (USD532) per month.

The value of the ETI decreases by half during the second year. An employer may only claim the incentive for a two-year period for each qualifying employee, and the incentive is due to be available until December 31, 2016.

TAGS: individuals | South Africa | compliance | tax | business | tax compliance | tax incentives | commerce | employees | tax authority | legislation | tax breaks | Employment | Africa | Tax

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