What Is ETI?


ETI reduces your monthly PAYE.

If your ETI is more than your PAYE, you get the excess back.

It reduces PAYE if you have employees between the ages of 18 and 29, who earn less than R6500 per month. What this means is that you can actually get some money back from the SARS for employing youth. If your ETI claim is greater than your monthly PAYE, you will get the excess back in cash, tax-free.

ETI in a nutshell

• ETI was introduced on the 1st January 2014 and ends in February 2029.
• If you have employees who are between the ages of 18-29, earn less than R6500 then you may qualify.
• ETI is for the benefit of the employer.

Qualification criteria

The employer must be tax compliant, this means no outstanding tax returns or outstanding monies in the month the ETI is claimed.

The employer must have qualifying employees, these are employees:
• who were employed on or after 1 October 2013
• have a green ID Book or work asylum seeker work permit
• are between 18 and 29 years old*, calculated in the month the ETI is claimed
• earn less than R6 500 in any month
• earn the minimum wage or at least R2000 per month
* (No age restriction applicable to special economic zones.)

How ETI is calculated

• ETI is calculated per employee per month using a SARS formula.
• The total ETI value is submitted on monthly/annual PAYE returns.
• You receive the benefit at the end of each month.
• ETI can be claimed for a maximum of 24 months per employee. It is calculated based on the number of qualifying employees you have in your employ in any given month.

Understanding Period Counts

• The most important variable
• An eligible employer can only claim ETI for a maximum of 32 months including the expanded ETI claims per qualifying employee
• The 32 months do not need to be consecutive.
• If an employee qualifies for ETI, the incentive must be claimed in that month.
• If ETI was not claimed for an employee who qualified previously that ETI is lost and cannot be claimed in the current Tax year.

ETI Benefit Mechanisms – How ETI is paid out

Credit offset

You claim your monthly ETI benefit by reducing your monthly PAYE. E.g. If you PAYE is normally R150 000pm and your ETI is R50 000 then you only pay SARS R100 000.

ETI Refunds

Clients receive ETI refunds for 2 reasons:

• ETI is greater than the monthly PAYE, these refunds are paid out every six months.
• Historical ETI claims submitted.

ETI Misconceptions

There are BBBEE requirements for ETI

This is incorrect. ETI can be claimed irrespective of the race or gender of your employees and has NO BBBEE requirements of any kind.

There is a limit to how much ETI you can claim

There is no limit or cap on the value of the ETI claim.

You have to pay tax on these benefits

ETI benefits are tax neutral i.e. no tax payable on amounts received or offset.

If you claim ETI, you cannot claim other allowances

ETI does not affect any other incentives you may already be claiming, including learnership allowances, this is specifically included.

ETI Learnership

If you have not combined the benefit of the learnership allowances then you are losing a lot of money.


Need ETI Advice?
Contact us on 071 217 0364 or 073 060 0998