Abuse in the Employment Tax Incentive (ETI) to be curbed
The employment tax incentive (ETI) was introduced in 2013 to encourage the employment of persons between the ages of 18 and 29 years, by allowing employers to reduce their PAYE liability to SARS for the first two years in which they employ qualifying employees (with a monthly remuneration of ZAR 6,500 or less). Over the past 8 years there has been a proliferation of training institutions assisting some taxpayers to claim the ETI for students who in fact never work for the employer. To curb this abuse, the definition of an “employee” will be changed in the Employment Tax Incentive Act to specify that work must be performed in terms of an employment contract that adheres to record-keeping provisions, in accordance with the Basic Conditions of Employment Act. This amendment will take effect on 1 March 2021.
Should you be concerned about your current ETI system / claims and like an experienced practitioner to cast their eye over the setup, please do not hesitate to contact us. This issue is going to be on the radar of the SARS auditors and with the number of audits being increased it would be prudent to get some professional advice before SARS visit and start asking awkward questions.