The employment tax incentive was instituted in order to encourage employment creation for the youth (i.e. employees between the ages of 18 and 29 years) and the incentive will come to an end on 28 February 2029.

If an employer is eligible to receive the employment tax incentive in respect of a qualifying employee in respect of a month, that employer may reduce the employees’ tax payable by that employer with the amount of the incentive.

The main requirements to qualify for this incentive are as follows:

• The taxpayer must be registered for the purposes of the withholding and payment of employees’ tax
• The wage paid to an employee may not be less than the amount payable by virtue of a wage regulating measure applicable to that employer (i.e. a minimum wage) or if the amount of the wage payable to an employee is not subject to any wage regulating measure, the amount of R2 000 per month if the employee is employed for more than 160 hours in the month (if the employee is employed for less than 160 hours in a month and is paid remuneration in respect of those hours a percentage of R2 000 must be used)
• An employee is a qualifying employee if the employee:
  • is not an independent contractor
  • is not less than 18 years old and not more than 29 years old at the end of any month in respect of which the employment tax incentive is claimed
  • was not employed by the employer before 1 October 2013
  • is in possession of an identity card or is in possession of an asylum seeker permit
  • in relation to the employer, is not a connected person
  • is not a domestic worker
  • performs actual work in terms of a documented employment contract
  • is not mainly involved in studying
  • does not earn more than R6 500 (R6 000 before 1 March 2019) per month

The Minister of Finance designated special economic zones and industries in respect which an employer will also qualify for the incentive.

The amount of the employment tax incentive in respect of a qualifying employee
is determined as follows:

• During each month of the first 12 months, 75% of the monthly remuneration of the employee if the employee’s remuneration is less than R2 000, R1 500 (R1 000 before 1 March 2022) if the employee’s remuneration is R2 000 or more but less than R4 500 and according to a formula if the employee’s remuneration is R4 500 or more but less than R6 500.
• During each of the 12 months after the first 12 months that the same employer employs the qualifying employee, 37.5% of the monthly remuneration of the employee if the employee’s remuneration is less than R2 000, R750 (R500 before 1 March 2022) if the employee’s remuneration is R2 000 or more but less than R4 500 and according to a formula if the employee’s remuneration is R4 500 or more but less than R6 500.