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

(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]

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.

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]

Employment Tax Incentive

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

[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/Documents/PAYE%20BRS/SARS_PAYE_BRS%20-%20PAYE%20Employer%20Reconciliation_(Including%20the%20ETI%20Requirements)_v12%201%203.pdf

[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]

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.

[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.