SONA Announcement of Intention to Review the Employment Tax Incentive Requirements
One item announced by the State President in the State of the Nation Address on 11 February 2022 will have a direct impact on payroll suppliers, and that is the intention to review the requirements of the Employment Tax Incentive Act. In recent years, other projects have been initiated to address the high levels of unemployment in the country (the Presidential Employment Stimulus programs, the Social Employment Fund, and the YES Initiative), but arguably the Employment Tax Incentive that focuses on young people aged 18 to 29 years of age has been the most successful. However, based on anecdotal evidence gained from speaking to many employers over many years, the take-up of the ETI project would have been even better had the requirements been simpler, and the risk to employers of getting it wrong been lowered. In several submissions to National Treasury since 2015 the PAGSA has requested a re-think of the troublesome aspects of the ETI Act, and in recent years, we have proposed changes that will significantly simplify the requirements. If these proposals are accepted, implementation of the ETI requirements will be easier for payroll suppliers, and the administration burden for employers will be reduced, therefore less costly and at a lower risk. The 2022 State of the Nation Address stated that:
“To encourage hiring by smaller businesses, we will be increasing the value and expanding the criteria for participation in the Employment Tax Incentive”
“The changes to the incentive will make it easier for small businesses in particular to hire young people.”
One hopes that the steps taken to simplify the requirements will apply to all employers, and not only to “smaller businesses”. The Budget proposals on 23 February 2022 will provide some more detail, even though the policy makers keep their cards close to their chests and their wording in the budget to a minimum. Once put into effect, this proposal in SONA will no doubt result in changes to payroll systems and to ETI administration processes but it is very welcome news for both payroll suppliers and for those employers that are part of the ETI project. Regards,
Rob Cooper
Chairman Payroll Authors Group of South Africa
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