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Employment tax incentive

South Africa

The Employment Tax Incentive Act 2013 has been established to introduce a cost-sharing taxation structure to encourage the employment of young and less experienced work seekers. Taxand South Africa takes a look at further income tax implications that this act may have.

The ETIA provides that eligible employers who can receive the incentive are private entities that are duly registered for PAYE and are not disqualified from receiving the incentive by the Minister of Finance due to the displacement of an employee or by not meeting the training and classification conditions as prescribed by the Minster by regulation.

Eligible employers must employ qualifying employees who are between 18 to 29 years old at the end of the month the incentive is claimed and who have South African Identity documents or asylum seeker permits. The age limit is not applicable if the employee renders their services to an employer who operates in a special economic zone or an industry designated by the Minister. However the employee must not be employed as a domestic worker nor be a connected person to the employer or an associated person to the employer.

The employment tax incentive is exempt from income tax and will be accounted for as income in the accounting records of the employer.

Discover more: Employment tax incentive- accounting and income tax treatment


Your Taxand contact for further queries is:
Beric Croome
T. +27 11 269 7720
E. bcroome@ensafrica.com

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Also published in Thomson Reuters' Taxnet Pro,  31 July 2014

Taxand's Take

This incentive has income tax implications and it is necessary for employers to understand not only the qualifying criteria for the employees’ tax incentive but the accounting and income tax treatment as well.

Taxand's Take Author

Beric Croome
South Africa

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