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Employment tax incentive
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.
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Also published in Thomson Reuters' Taxnet Pro, 31 July 2014