March 2018 Budget Highlights for Payroll

Employment Tax Incentive Act and Special Economic Zones (SEZ’s)

In the budget speech, the Minister of Finance stated that he has Gazetted a notice creating six Special Economic Zones. The link between ETI and SEZ’s is created within Section 6 of the Employment Tax Incentive Act which provides the criteria that must be satisfied before an employee can qualify to generate the tax incentive for the employer. One of those conditions is that of the age of the employee.

The portion of section 6 that is relevant to SEZ’s is section 6(a)(ii) which states:

Qualifying employees. An employee is a qualifying employee if the employee- (a)

• is not less than 18 years old and not more than 29 years old at the end of any month in respect of which the employment tax incentive is claimed;
• is employed by an employer operating through a fixed place of business located within a special economic zone designated by notice by the Minister of Finance in the Gazette and that employee renders services to that employer mainly within that special economic zone; or

The Gazette published by the Minister of Finance now links the six SEZ’s to section 6(a)(ii).

This means that there is no age qualification test for employees who render services mainly within one of the six designated SEZ’s to an employer whose business is located within that SEZ.

Note that the Special Economic Zones that have been in existence for quite some time were created by the Minister of Trade and Industries, not by the Minister of Finance, and therefore were not linked to the requirements of section 6(a)(ii) of the ETI Act.

It is not yet clear when the effective date of the SEZ’s being incorporated into the Employment Tax Incentive Act.

Subsistence Allowance Limits (effective 1 March 2018)

For South Africa, the daily limits are as follows:
Incidental expenses: R128 per day
Meals and incidentals: R416 per day

For any country outside of the borders of South Africa, there is a daily limit per country. The list of these countries with their limits is available on the SARS website.

Medical Tax Credits (effective 1 March 2018)

The monthly values per person are: