Review of the employment tax incentive

Government formally introduced the employment tax incentive into law on 1 January 2014, through the promulgation of the Employment Tax Incentive Act, No 26 of 2013.

24 Feb 2016 1 min read Special Edition Tax and Exchange Control Alert Article

The purpose of the employment tax incentive was to reduce the cost to employers of hiring young and inexperienced youth. In other words, the employment tax incentive is essentially a cost-sharing mechanism between the private sector and Government, which operates by reducing the amount of tax that is owed by an employer through the Pay-As-You-Earn (PAYE) system.

It should, however, be noted that the employment tax incentive expires on 31 December 2016 and accordingly, the incentive will cease after 1 January 2017. Therefore, incentive amounts not deducted from PAYE as at 31 December 2016, will be forfeited.

Notwithstanding the aforementioned, SARS has made data on the employment tax incentive available and a review, as to whether to extend the period for which the incentive can be utilised, is currently under way. In the event of any delay in finalising the aforementioned review, Government may consider extending the employment tax incentive by one year.

The outcome of the review will be published and presented to Parliament by the third quarter of 2016.

The information and material published on this website is provided for general purposes only and does not constitute legal advice. We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages. Please refer to our full terms and conditions. Copyright © 2024 Cliffe Dekker Hofmeyr. All rights reserved. For permission to reproduce an article or publication, please contact us