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Top Tip: To work out if you are a qualifying employer click here.
Qualifying employers will have to calculate and claim the incentive on a monthly basis. This amount must be completed on the Monthly Employer Declaration (EMP201), which was amended.
Experiencing issues?
Top Tip: Remember you may only claim the ETI from the month of January 2014 for all qualifying employees employed from 1 October 2013. The amount which may be claimed must not be back-dated to October 2013. The ETI became effective 1 January 2014, and an employer is only eligible to receive the ETI from this date.
How do I calculate my ETI?
Follow these four steps on a monthly basis to calculate your ETI amount which may be claimed:
Step 1
Identify all qualifying employees for the month
Step 2
Work out the applicable employment period for each qualifying employee
Step 3
Then work out each employee’s “monthly remuneration”
- When working out the remuneration amount to be used to calculate the ETI, if the qualifying employee has been employed for:
- 160 hours in the month, the actual remuneration amount paid must be used
- Less than 160 hours in the month, the remuneration amount must be ‘grossed up’ to 160 hours per month to calculate the value of the ETI. The amount can then be calculated and be ‘grossed down’ in the same ratio.
If the qualifying employee was employed for 80 hours in the month and is paid R1 500, the remuneration must be ‘grossed up’ to 160 hours to check whether the amount falls within the wage requirements.
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Step 4
Calculate the amount of the incentive per qualifying employee as per the table 'Determination of Employment Tax Incentive' below.
Note: Where the employee has been employed for less than 160 hours ‘gross down’ in the same ratio as ‘grossed up’. This means that the ETI amount which may be claimed must be divided by the 2 from the example above. Remember to always do all calculations in brackets first.
The Monthly Calculated ETI amount per qualifying employee is within the prescribed legislated threshold.
Table: Determination of the Employment Tax Incentive
4.1 Tax periods (months) from January 2014 to February 2019
The monthly calculated ETI amount per qualifying employee is determined as follows:
- For the first twelve months of employment –
| Monthly Remuneration | Determination | Monthly Calculated ETI Amount |
|---|---|---|
| R0 – R2000 | 50% x monthly remuneration | R0 – R1000 |
| R2001 – R4000 | Fixed at R1000 | R1000 |
| R4001 – R6000 | Formula: X = A – (B x (C – D)) X = monthly calculated amount A = R1000 B = 0,5 C = Monthly Remuneration D = R4000 | R 999 – R0 |
- For the second twelve months of employment –
| Monthly Remuneration | Determination | Monthly Calculated ETI Amount |
|---|---|---|
| R0 – R2000 | 25% x monthly remuneration | R 0 – R499 |
| R2001 – R4000 | Fixed at R 500 | R500 |
| R4001 – R6000 | Formula: X = A – (B x (C – D)) X = monthly calculated amount A = R500 B = 0,25 C = Monthly Remuneration D = R4000 | R499 – R0 |
4.2 Tax period (months) from March 2019 to February 2022
The monthly calculated ETI amount per qualifying employee is determined as follows:
- For the first twelve months of employment –
| Monthly Remuneration | Determination | Monthly Calculated ETI Amount |
|---|---|---|
| R0 – R1999 | 50% x monthly remuneration | R0 – R999.50 |
| R2000 – R4499 | Fixed at R1000 | R1000 |
| R4500 – R6499 | Formula: X = A – (B x (C – D)) X = monthly calculated amount A = R1000 B = 0,5 C = Monthly Remuneration D = R4500 | R 1000 – R0.50 |
| R6500 and more | Nil | R0.00 |
- For the second twelve months of employment –
| Monthly Remuneration | Determination | Monthly Calculated ETI Amount |
|---|---|---|
| R0 – R1999 | 25% x monthly remuneration | R 0 – R499.75 |
| R2000 – R4499 | Fixed at R 500 | R500 |
| R4500 – R6499 | Formula: X = A – (B x (C – D)) X = monthly calculated amount A = R500 B = 0,25 C = Monthly Remuneration D = R4500 | R500 – R0.25 |
| R6500 and more | Nil | R0.00 |
In working out the first or the second 12-month period, only the months in which the employee was a qualifying employee is considered.
For example, the employee was employed on 1 March 2015 and qualified for ETI in the months March, April, May. Due to additional income received, the employee did not qualify for ETI for the months June and July. From August, the employee received normal income and qualified for ETI again. To determine the 12 months for calculation purposes, March, April, May, August till April must be included. This means that to calculate ETI you use 12 qualifying months and not calendar months.
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