{"id":69449,"date":"2023-05-16T01:00:00","date_gmt":"2023-05-15T23:00:00","guid":{"rendered":"https:\/\/www.sage.com\/en-za\/blog\/?p=69449"},"modified":"2026-01-29T14:15:26","modified_gmt":"2026-01-29T12:15:26","slug":"hire-young-workers-and-give-your-business-a-boost-with-the-employment-tax-incentive","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-za\/blog\/hire-young-workers-and-give-your-business-a-boost-with-the-employment-tax-incentive\/","title":{"rendered":"Hire young workers and give your business a boost with the Employment Tax Incentive"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-za\/blog\/category\/strategy-legal-operations\/compliance\/\" class=\"entry-header__link\">Compliance<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tHire young workers and give your business a boost with the Employment Tax Incentive\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2023-05-16T01:00:00+02:00\">May 16, 2023<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Hire young workers and give your business a boost with the Employment Tax Incentive\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-za\/blog\/hire-young-workers-and-give-your-business-a-boost-with-the-employment-tax-incentive\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n\t<\/header>\n\n\n\n<div class=\"wp-block-post-author has-dark-background-color alignfull\">\n\t<div class=\"container\">\n\t\t<div class=\"col\">\n\t\t\t\t\t\t\t<div class=\"co-authors\">\n\t\t\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-za\/blog\/author\/charlottedanby\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2021\/05\/Charlotte-350x350.jpg\" class=\"entry-author__image\" alt=\"\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2021\/05\/Charlotte-350x350.jpg 350w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2021\/05\/Charlotte-768x768.jpg 768w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2021\/05\/Charlotte-810x810.jpg 810w, https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2021\/05\/Charlotte.jpg 1200w\" sizes=\"auto, (max-width: 40px) 100vw, 40px\" \/>\t\t\t\t<span class=\"entry-author__name\">Charlotte Danby<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n<p>In this year\u2019s State of the Nation Address (SONA), President Cyril Ramaphosa emphasised the role of government in helping businesses thrive so that they can create much-needed jobs in South Africa.<\/p>\n\n\n\n<p>The need to improve policies and regulations to support business growth and encourage entrepreneurship has reached a crisis point: <a href=\"https:\/\/businesstech.co.za\/news\/business\/542840\/here-are-your-chances-of-employment-in-south-africa-based-on-your-level-of-education\/\">as of Q3 2021, South Africa\u2019s unemployment rate reached 34.9%.<\/a> Of great concern is the growing number of unemployed young people, particularly those without tertiary training or education.<\/p>\n\n\n\n<p>It\u2019s imperative \u2013 and some would say long overdue \u2013 that the state reviews the current restrictive regulatory environment to enable more employers to create more employment opportunities.<\/p>\n\n\n\n<p>However, there is an existing and vastly underutilised business tax benefit to encourage employers to hire more young workers. It\u2019s called the <a href=\"https:\/\/www.sars.gov.za\/types-of-tax\/pay-as-you-earn\/employment-tax-incentive-eti\/\">Employment Tax Incentive (ETI)<\/a>, and it\u2019s one of the most powerful SME tax benefits there is, says Jasper Basson, owner of accounting firm <a href=\"http:\/\/www.dryk-holdings.com\/\">Dryk Holdings<\/a> and founder of <a href=\"https:\/\/www.entrepreneur-sa.com\/\">Entrepreneur-SA.com<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-eti\">What is the ETI?<\/h2>\n\n\n\n<p>The ETI reduces your (the employer\u2019s) overall Pay-As-You-Earn (PAYE) contribution without affecting individual employee wages.<\/p>\n\n\n\n<p>In his 2022 Budget Speech, Finance Minister Enoch Godongwana announced an increase in the ETI values from 1 March 2022.<\/p>\n\n\n\n<p>An employee qualifies for the ETI if he\/she:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>works for you, assists in conducting business, and receives remuneration for their work,<\/li>\n\n\n\n<li>is documented in your employer records according to the provisions of section 31 of the BCEA,<\/li>\n\n\n\n<li>earns at least the minimum wage,]<\/li>\n\n\n\n<li>is between 18 and 29 years old, or is employed in a special economic zone, and<\/li>\n\n\n\n<li>has a valid South African ID, a valid asylum seeker permit, or an ID in terms of Section 30 of the Refugees Act.<\/li>\n<\/ul>\n\n\n\n<p>An employee will not qualify for the ETI if he\/she:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>is a domestic worker,<\/li>\n\n\n\n<li>is a \u201cconnected person\u201d to the employer,<\/li>\n\n\n\n<li>spends more time studying than working (unless the employer and employee have entered into a learning programme as defined in Section 1 of the Skills Development act, or<\/li>\n\n\n\n<li>earns a monthly remuneration of R6,500 or more.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-does-the-eti-work\">How does the ETI work?<\/h2>\n\n\n\n<p>Let\u2019s say you hire five South African employees aged between 20 and 25 with salaries of R4,000 per month. The total monthly payroll for these five employees is R20,000. Thanks to the ETI, you can deduct the equivalent of R7,500 from your overall monthly PAYE liability in the first 12 months in which the employees qualify. You can deduct R3,750 in the second 12 months in which the employees qualify.<\/p>\n\n\n\n<p>Your employees\u2019 wages are completely unaffected.<\/p>\n\n\n\n<p>\u201cThe ETI is administered by the employer. In other words, your <a href=\"https:\/\/www.sage.com\/en-za\/sage-business-cloud\/payroll\/\">payroll system<\/a> does the calculations and the employer must deduct the total ETI calculated by the payroll system for the month from the total PAYE payable to SARS. For cash-conscious SMEs, the ETI can provide a helpful return on employment that can be invested back into the business,\u201d says Jasper.<\/p>\n\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Keep your submissions simple this Tax Year-End<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get the latest expert advice and free resources to help you manage your payroll and enable compliance.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"https:\/\/www.sage.com\/en-za\/cp\/sagecloudpayrollsoftware\/#hrguide?utm_source=sageadvice&#038;utm_medium=website&#038;utm_campaign=HRandPayroll&#038;utm_term=TaxYearEnd\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\tid=\"cta-id-69394\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tdata-button-location=\"cta_box\"\n\t\t\t\t\t\t\t\t\t\t\t>Find out more<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-1097994958-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-1097994958-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-the-eti-small-print\">The ETI small print<\/h2>\n\n\n\n<p>The ETI is a widely beneficial tax benefit: employers are rewarded for hiring young people, and young people gain valuable work skills and experience. As a result, the private sector grows, and the economy strengthens.<\/p>\n\n\n\n<p>And yet, few companies are aware of the ETI and how it works, says Jasper. In fact, research by Sage \u2013 <a href=\"https:\/\/www.sage.com\/en-za\/blog\/white-paper-payroll-and-hr-in-sa-rising-to-the-challenges-of-change\/\">Payroll and HR in SA: Rising to the challenges of change<\/a> \u2013 found that only 52% of SMEs currently take advantage of the ETI.<\/p>\n\n\n\n<p>What\u2019s stopping the rest?<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A lack of awareness (40%)<\/li>\n\n\n\n<li>Fear of claiming ETI incorrectly (25%)<\/li>\n\n\n\n<li>Concerns surrounding increased admin (21%)<\/li>\n<\/ul>\n\n\n\n<p>That said, like any tax benefit, the ETI does have some parameters, says Jasper.<\/p>\n\n\n\n<p>\u201cEmployees can qualify for ETI for 24 months from employment with the employer\/associated employer \u2013 these do not have to be consecutive months and only qualifying months are counted towards the 24 months. The incentive falls away after the 24 qualifying months and cannot be switched on retroactively, so make sure you apply the ETI as soon as you employ an eligible worker.\u201d<\/p>\n\n\n\n<p>He adds that it\u2019s also worth noting that SARS pays close attention to ETI submissions and conducts audits from time to time. That\u2019s not to put you off the ETI but rather to emphasise the importance of an up-to-speed and well-advised payroll system.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-do-you-qualify-for-the-eti\">Do you qualify for the ETI?<\/h2>\n\n\n\n<p>Your company needs to pay PAYE through its more senior employees\u2019 salaries to benefit from the ETI. The best way to determine if the ETI is a relevant tax advantage for your business is to conduct a financial health assessment.<\/p>\n\n\n\n<p>Jasper says this is something his team does for every new monthly accounting client, and one of the first things they look at is if they can use the ETI on the client\u2019s payroll.<\/p>\n\n\n\n<p>\u201cSmall business owners have a lot on their plates, so it\u2019s understandable that many want to comply with legislation, <a href=\"https:\/\/www.sage.com\/en-za\/blog\/an-accountant-s-top-tips-for-tax-year-end\/\">make it through tax year-end in one piece<\/a>, and get on with business. That said, SMEs have nothing to lose and only lots to gain from the ETI, so it\u2019s worth investigating further.\u201d<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Your guide to payroll tax year-end<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p class=\"\">Get best practices for preparing, processing and planning your year-end payroll activity. This guide will help you work more efficiently, giving you more time to run, manage, and grow your business.<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-e9bc8b71-cf58-4a7f-a7ae-41fa1cf33e1a\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download guide<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"800\" height=\"450\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/02\/HR-content_Sage-300-People.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/02\/HR-content_Sage-300-People.jpg 800w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to the Sage Advice enewsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get a roundup of our best business advice in your inbox every month.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-84fe79b5-668d-41f8-a0cc-6229018c4ac9\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-1181404518-1440x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-1181404518-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>In this year\u2019s State of the Nation Address (SONA), President Cyril Ramaphosa emphasised the role of government in helping businesses thrive so that they can create much-needed jobs in South Africa. The need to improve policies and regulations to support business growth and encourage entrepreneurship has reached a crisis point: as of Q3 2021, South [&hellip;]<\/p>\n","protected":false},"author":1239,"featured_media":69841,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"sage_hide_published_date":false,"sage_hide_read_time":false,"sage_hide_share_buttons":false,"footnotes":""},"categories":[35,26],"tags":[313,321,213],"business_type":[2,3],"lilypad":[],"context":[],"industry":[],"persona":[15,16],"imagine_tag":[51,57,99,85],"coauthors":[441],"class_list":["post-69449","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-compliance","category-people-leadership","tag-bookkeeping","tag-compliance","tag-tax","business_type-small-business","business_type-medium-business"],"sage_meta":{"region":"en-za","author_name":"Charlotte Danby","featured_image":"https:\/\/www.sage.com\/en-za\/blog\/wp-content\/uploads\/sites\/9\/2022\/04\/GettyImages-961904082.jpg","imagine_tags":{"51":"Accountants","57":"HR and Payroll","99":"HR software","85":"Small business"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice South Africa","distributor_original_site_url":"https:\/\/www.sage.com\/en-za\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/posts\/69449","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/users\/1239"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/comments?post=69449"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/posts\/69449\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/media\/69841"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/media?parent=69449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/categories?post=69449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/tags?post=69449"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/business_type?post=69449"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/lilypad?post=69449"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/context?post=69449"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/industry?post=69449"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/persona?post=69449"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/imagine_tag?post=69449"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-za\/blog\/api\/wp\/v2\/coauthors?post=69449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}