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Deloitte call for comments on the Draft Employment Tax Incentive Bill

draft bill

The Draft Employment Tax Incentive Bill was released for public comment on 20 September 2013. Deloitte will be preparing commentary on the Draft Bill and invite you to submit your commentary to Izak Swart at iswart@deloitte.co.za or Newton Cockcroft at ncockcroft@deloitte.co.za by no later than 8 October 2013.

The Draft Bill aims to incentivise the employment of young, first time workers between the ages of 19 and 29 earning less than R6 000 per month (R72 000 per annum).

The concept of an employment tax incentive was first announced by the President in his 2010 State of the Nation Address; and in the 2010 Budget. It is proposed that employers who are registered to withhold and pay tax on behalf of their employees (PAYE) will be eligible to decrease the PAYE employees’ tax that is payable for hiring qualifying employees by the incentive benefit.

This employment tax incentive is expected to commence on 1 January 2014, for employment commencing after 1 October 2013, and will be available until 31 December 2016.

Qualifying employees

It is proposed that a qualifying employee is a person who meets the following requirements:

  • The employee must be in possession of a valid South African identity card
  • The employee must not be less than 19 years old and more than 29 years old
  • The employee and the employer must not be connected persons as defined in section 1 of the Income Tax Act
  • The employee’s salary must be between the minimum wage for that specific sector and R6 000 per month, with a minimum of R2 000 per month applying where no sectoral determination is applicable
  • The employee is not a domestic worker as defined in section 1 of the Basic Conditions of Employment Act, 1997

The employment tax incentive is also available to employers operating through a fixed place of business located within a Special Economic Zone (SEZ), designated industries as well as certain public entities as nominated by the Minister of Finance by notice in the Gazette. Age limitations will not be applicable here.

Supporting documents (click on the titles below to download the documents)

Call for comments

Deloitte will be preparing commentary on the Draft Bill and invite you to submit your commentary to Izak Swart at iswart@deloitte.co.za or Newton Cockcroft at ncockcroft@deloitte.co.za by no later than 8 October 2013. You may also contact Newton Cockcroft on +2711 806 5298 or Izak Swart on +2711 806 5685.

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David Graham

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