# Regulatory Compliance Category > Tax Forum >  Employment Tax Incentive (The Youth Employment Subsidy) questions

## Dave A

I see SARS has put up a page on what they think we need to know about the Employment Tax Incentive - or as it is more commonly referred to, the Youth Employment Subsidy.

It does a fairly good job, but it doesn't seem to answer one of my questions. So I ask here just in case someone knows the answer.

I've employed a youngster who qualifies (employed from 1st November 2013). Can I claim the incentive for November and December 2013 in my January 2014 return?

----------


## Mike C

To add to Dave's Question.  




> Employee is 18 to 29 years old (please note that the age limit is not applicable if the employee renders services inside a special economic zone (SEZ) to an employer that is operating inside the SEZ, or if the employee is employed by an employer that operates in an industry designated by the Minister of Finance;


1. What is the SEZ (specialized Economic Zone)?
2. Which industry has the Minister of Finance designated?
3. When they say that the age limit does not apply - do they mean that ANY age applies to these, or that the Employment Tax Incentive does NOT apply to these?

----------


## Mike C

Found this info on the Techforum Website, which answers my third question and tells me that the SEZ has not yet been specified.




> Further, to encourage economic activity within Special Economic Zones (SEZ), the same incentive will be available to an employer who conducts his business in one of these zones (still to be specified), with the added advantage that the incentive is not limited to young people but is available in respect of all employees who qualify in terms of the other requirements.

----------


## Dave A

Maybe let's accumulate questions here, and I'll give SARS a call next week for answers. 
One call to answer them all  :Big Grin: 

(No sense on us *all* calling and asking the same questions)

----------


## Christel

Hi Dave,
You can only start claiming the Incentive from the January salary, so you would not have any claim on the Oct/Nov/Dec salaries.  SARS has updated their info page to include this:  (http://www.sars.gov.za/TaxTypes/PAYE...Incentive.aspx) look under the second heading - "top tip" .

The SAIT is having a webinar about this on the 13th.  I can give more feedback after that.  Or if someone wants to add more questions, I can try and really listen (for a change) and give some feedback afterwards.

Thanks.

----------

Dave A (06-Feb-14), Mike C (05-Feb-14)

----------


## Dave A

> The SAIT is having a webinar about this on the 13th.  I can give more feedback after that.  Or if someone wants to add more questions, I can try and really listen (for a change) and give some feedback afterwards.


 :Cool: 

My next question is the practicalities of capturing the incentive for accounting purposes. For now I'm going with an "Other Income" account, but a definitive guide would be useful.

And finally (for now) - would the incentive income form part of taxable income for income tax purposes?

----------


## Christel

good questions, Dave... I'll add them to my "growing" list of questions...

----------


## Elijah

Hi All

I have a query regarding the new Employment Tax Incentive. If you have a qualifying employee earning R6000 per month. How much do you deduct from the Tax Calculaution

thanks in advance

Elijah

----------


## Elijah

Okay, Would like to answer my own question : Answer is R0. According to the formulae provided by SARS

----------


## Dave A

Precisely R0.00

Based on this is the first year - 

= R1 000 – (0.5 x (Monthly Remuneration – R4 000))
= R1 000 – (0.5 x (R6 000 – R4 000))
= R1 000 – (0.5 x R2 000)
= R1 000 – R1 000
= 0

EDIT: - You just beat me to it  :Wink:

----------


## Christel

I found a nice document for those who want to check out the EMP501 process with the ETI changes updated....
http://www.sars.gov.za/AllDocs/Docum...12%201%203.pdf

----------

Dave A (11-Feb-14)

----------


## Christel

Ok, so we had the webinar hosted by SAIT today... and wait for it...... it crashed after 20 minutes... EISH.  They will either have to re-schedule or give us a copy to download.  A few things that we did clear out was that the incentive will not be treated as income, but rather be accounted for in the salary section on your accounting program, i.e. 4000 codes in Pastel.  Basically like you would enter the diesel rebates from SARS, you would open an ETI account and post the incentives there so that in the end your salaries does not get affected, and all rebates can telly up to balance to your emp201 returns.

----------

Dave A (13-Feb-14), KimH (14-Feb-14), Mike C (14-Feb-14)

----------


## Dave A

> A few things that we did clear out was that the incentive will not be treated as income, but rather be accounted for in the salary section on your accounting program, i.e. 4000 codes in Pastel.  Basically like you would enter the diesel rebates from SARS, you would open an ETI account and post the incentives there so that in the end your salaries does not get affected, and all rebates can telly up to balance to your emp201 returns.


Any chance that could be translated into non-Pastel speak?

Debit the *PAYE Liability* account.
Credit a *Salary Expense* subaccount named *ETI*.

Does that sound right?

----------


## KimH

Christel - didn't that chat box drive you nuts yesterday.... my goodness - I never realized what a bunch of complainers people in our field are lol!!

Dave - that sounds right. In my case, I break the employees tax liability accounts in the balance sheet down (paye / uif & sdl) each have their own code, so I would just add the new ETI account for clients that qualify.

As a side note - we have been tentatively informed that the webinar will take place again next Thursday, but I am sure Christel will provide updates as SAIT releases them.

----------

Dave A (14-Feb-14)

----------


## Christel

Hi KimH, it was actually an "eye-opener".  Flip I've never seen such a bunch of complainers.  We actually had a good laugh about it.  And I'm sure Lucky from SARS was relieved he did not have to answer all those questions!!

Dave, I normally load my emp201's as a supplier invoice on the last day of the specific amount.  Debit the PAYE per employee to the specific employee's salary account (the aim is to have the gross amount in this account at month end), then credit the ETI account, debit the 1% employee UIF contribution to his specific salary account, debit the 1% company UIF to the Company Contribution Account, debit the SDL to the Company Contribution Account.  This should balance to your payment on the emp201.

----------


## Mike C

I have just updated my payroll and had to enter an ETI (Standard Industry Classification Code) for the company as well as each employee.  Can anyone tell me what this is all about?

----------


## Dave A

You can try this tool at Stats SA.

If the company is registered for SDL, there should be a SIC code on that registration.

----------

Mike C (10-Mar-14)

----------


## Christel

For anybody that is interested in this topic, there is a YOUTUBE session on it:   http://youtu.be/0WBhVEHfOZc

I'm sure most of your questions will be covered...

----------


## Dave A

Following on with SIC codes, scratching around I get the feeling this might be a bit of a minefield.

Stats SA seems to have the responsibility for creating and allocating SIC codes, but then there's also some indication that CIPC also has a hand in this.

Then when I check the SETA lists... Well, things don't tie up as neatly as one might expect.

I've attached the SETA list of SIC codes for everyone's convenience.
(Although I'm a little concerned this might just add to the confusion).

----------


## Mike C

> I get the feeling this might be a bit of a minefield.


I must admit that I am rather confused.  Who "allocates" the SETA code ... or perhaps it is better to ask ... is this code officially registered against a business?  Can you change the SETA code without going through official channels, or is it merely for statistical purposes.

I have looked at our CK documents and don't see it listed anywhere there, and can't find any registration of SDL so can't link any SIC codes to that.

Furthermore Pastel Payroll has an extensive list of SIC codes, but not as extensive as the tool at stats SA.  So I can't get an exact match.

Still more confusing is the fact that you can give individuals in the company different SIC codes.

----------


## Dave A

> Furthermore Pastel Payroll has an extensive list of SIC codes, but not as extensive as the tool at stats SA.  So I can't get an exact match.


I'm finding the same problem with the Intercode software I'm currently setting up - hence my current scratch around the SIC code issue.

What I do know (from the time I was actively involved with AgriSETA) is the SIC codes are (or were) being made more granular and has been added to in a fairly big way over the past 5 years or so. What I don't know with absolute certainty right now is who is in charge of generating them (just who is the authority here?).

I also suspect issues with matching them up across different sources, although I haven't got to closely interrogating that aspect as yet.

When it comes to the limitations of software in this regard, I expect our next step would be to give the software developers feedback on the issue.

----------


## Christel

Hello,
I've just returned from a PAYE update course and can report that the SIC codes they are referring to w.r.t. ETI is called the SIC7 codes, and I found it on the SARS website.  It is NOT the same as the SDL/SETA SIC codes.  

I found a list in the document called:  SARS_PAYE_BRS - PAYE Employer Reconciliation_(Including the ETI Requirements)_v12 1 3.doc   - Appendix E (From page 68 onwards).

----------


## Dave A

Well, the good news is the Stats SA tool I linked to earlier are also the SIC7 codes, and the results do tie up with the SARS document Christel referred to above.

And yes, after testing some samples, the SETA SIC codes don't correlate. Not even close.

----------


## Houses4Rent

Oh dear, most of these abreviations are greek to me and I do not have a payrole either nor any accounting software. I intent to employ/contract a juntior admin girl. Do I have any chance of getting a benefit which can be managed/claimed without all these complicated things?

----------


## Christel

If you are PAYE registered then you could get a benefit...

----------


## Beancounter

The ETI guide states:

*10.2 Income tax*
Any amount of ETI received by an eligible employer under the ETI Act that reduces the employees tax payable by that employer is exempt from income tax under section 10(1)(s) of the Income Tax Act.

The Income Tax Act states:

*10. Exemptions*
1)There shall be exempt from normal tax--
the receipts and accruals of the government of the Republic in the national, provincial or local sphere;
s)any amount by which the employees tax as defined in section 1 of the Employment Tax Incentive Act, 2013, payable by an employer as contemplated in section 3 of that Act is reduced in terms of section 2(2) of that Act or paid in terms of section 10 of that Act; [added by the Employment Tax Incentive Act, 2013];

As the ETI claim is referred to as a "receipt" or "accrual", I will classify it as other income. I will also deduct it from taxable income as it is exempt in terms of Section 10.

----------


## Beancounter

> If you are PAYE registered then you could get a benefit...


You can only claim ETI if you are registered for PAYE. Refer to ETI guide paragraph 3:

"Section 3 stipulates that an employer is eligible for the ETI if the employer is registered under paragraph 15 of the Fourth Schedule for purposes of withholding and paying over to SARS employees’ tax and is not excluded under section 3(b) or 3(c). Paragraph 15 requires every person who is an employer to apply to the Commissioner for registration in accordance with Chapter 3 of the TA Act."

----------


## Greig Whitton

> Oh dear, most of these abreviations are greek to me and I do not have a payrole either nor any accounting software. I intent to employ/contract a juntior admin girl. Do I have any chance of getting a benefit which can be managed/claimed without all these complicated things?


Yes, you do! You don't need a payroll system or accounting software to claim from the ETI, so the SIC codes referenced in this thread won't be relevant to you if you don't. I have a plain English introductory guide to the ETI that may help.

----------

