13 Jun Employ Youth and Save
This June we celebrate Youth Day on the 16th, so this is an ideal time to employ some young, energetic graduates and school leavers
Did you know that you can claim back monthly against your PAYE submissions for new staff members employed under the age of 29?
From 1 January 2014 employers can take advantage of the Employment Tax Incentive (ETI), often referred to as the “youth wage subsidy”. It appears to be a very simple process, essentially administered by SARS.
WHO DOES IT APPLY TO?
The scheme is available to employers who employ South Africans citizens and asylum seekers with valid permits aged between 18 and 29. This excludes:
- Government departments, Municipalities, Public entities; and Employers not registered for PAYE.
Employers can also not claim in respect of following employees:
• Employees employed before 1 October 2013;
• Domestic workers;
• Connected persons (employees related to the employer);
• If the employee is paid less than the minimum wage applicable to the employer i.e. a collective agreement or Sectoral Determination; and
• If the employee displaces an existing employee.
WHAT CAN EMPLOYERS CLAIM?
Employers may claim 50% of an employee’s remuneration if the employee earns less than R 2000 (if the remuneration is not subject to any minimum wage provisions). If employees are earning between R 2 001 and R 4 000 an amount of R 1 000 can be claimed. For employees earning between R 4 001 and R 6000 a sliding formula applies .
Employers can claim the incentive in respect of qualifying employees for a period of 2 years. The value of the incentive however halves in an employee’s second year of employment. The incentive falls away on the commencement of the employee’s 3rd year of employment.
HOW TO TAKE ADVANTAGE OF THE SCHEME
It is important to keep a accurate records when implementing this:
• Obtaining copies of the employee’s ID book/card or valid asylum seeker’s permit (obtain certified copies before the employee commences employment);
• Ensuring that a signed employment contract is in place (contact RESOURCE recruitment if you need a template contract)
• Keeping an accurate record of employees’ ages.
The employer can deduct the subsidy from the employer’s monthly PAYE liability. SARS is in the process of updating their EMP 201, EMP 501 and IRP5 documents to incorporate this incentive scheme.
Why not employ a young person today, assist with providing employment and valuable experience to our youth, and benefit from the subsidy at the same time!
For more information contact SARS. http://www.sars.gov.za/TaxTypes/PAYE/ETI/Pages/default.aspx