Employment Tax Incentive (The Youth Employment Subsidy) questions

[Christel]

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

[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.

[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

[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

[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.