To give effect to the tax relief measures to combat COVID-19 pandemic announced by President Cyril Ramaphosa on 23 March 2020, Treasury has published for public comment the Draft Disaster Management Tax Relief Bill and the 2020 Draft Disaster Management Tax Relief Administration Bill on 01 April 2020. We summarise below the tax proposals contained in these bills.
COVID-19 Tax relief measures: Changes to the employment of tax incentive age eligibility criteria and amount claimable.
We summarise below the proposed changes to the Employment Tax Incentive Act No. 26 of 2013 (“the ETI Act”):
In an attempt to curb unacceptably high youth unemployment, the Employment Tax Incentive (“ETI”) programme was introduced in 2014 to promote youth employment.
The ETI programme allows the employer to claim the ETI in respect of the qualifying employees:
- Employees who are between the ages of 18 and 29 years and
- Earn monthly remuneration of less than R6 500.
The Maximum claimable per qualifying employee is limited to R1000 in the first year of employment and to R500 in the second year of employment.
The ETI can only be claimed for the first 24 months of qualifying employee’s employment by an employer or associated institutions.
The proposes changes to the ETI programme:
The proposed changes to the ETI programme as a result of the COVID-19 outbreak are as follows:
- The Maximum ETI claimable per qualifying employee is increased to R1 750 in the first year of employment and to R1250 in the second year of employment.
- Employers to be allowed to claim ETI amount of R750 for employees who are between the ages of 18 and 29 years and are no longer eligible for ETI as the employer has claimed ETI in respect of those employees for 24 months (First new category).
- Employers to be allowed ETI amount of R750 for employees who are between the ages of 30 and 65 years who earn less than R6 500 (Second new category) and
- The payment of ETI reimbursements to be made monthly instead of twice a year.