Employment Tax Incentives and Unemployment Insurance Fund changes

Jan 24, 2017 | Taxation Blog

Recently the President signed 6 bills which gave rise to payroll adjustments that affect you immediately and include the following:

1.  Employment Tax Incentive (ETI) programme

The ETI system was due to expire on 31/12/2016 but has now been extended to 28/02/2019.

Certain other changes have also been effected:

    • Claim limits/levels: Employers will only be able to claim up to a total of R20 million of ETI in each tax year.
    • Limit roll-overs/back-dated claims: Monthly claims can only be made up to the date of each 6-monthly reconciliation. After that no further claims for that reconciliation period would be allowed (any excess becomes available as a refund).

The effective date for the amendments is from 1 October 2016. A separate effective date for capping amounts is proposed to come into effect from 1 March 2017.

It is essential that you as the Employer remain tax compliant at all times to ensure that the ETI credits are not forfeited due to non-compliance on any SARS related affairs.

2.  Unemployment Insurance Fund (UIF)

The following changes have been effected:

    • The UIF Act has been amended to include all employees who work more than 24 hours a month. This includes employees classified under learnerships/’practicals’ and government or public service officials. It only excludes members of parliament, cabinet and provincial/municipal legislature.
    • Employees who work short time – where the payment for working short time is less than what they could claim should they claim unemployment, they will only be able to claim if they have the credits to cover the payment.
    • Maternity benefits will be paid out at 66% of the earnings of the beneficiary.
    • If the applicable employee has a miscarriages or still-birth during the third trimester, the contributor/employee is entitled to benefits for 17-32 weeks. To claim, the contributor must have been employed for 13 weeks prior to claiming the maternity-related UIF benefit.
    • Application for maternity benefits can now be made before or after the birth of a child (but not later than 12 months after the birth of the child).
    • The UIF benefit period is now calculated as one day’s benefit for every 5 days worked — up to a maximum of 365 days for every 4 years worked.
    • The application must be made within one year of termination.
    • Where the principle UIF contributor dies, beneficiaries of the contributor will have up to 18 months to lodge their claim for UIF compensation.

Currently, there are no changes to contributions to the UIF fund by employers or employees and no changes to the definition of “Earnings” or how the UIF is calculated.

Employers are urged to ensure they remain compliant with the Department of UIF and SARS – contributions are paid by the Employer to SARS/Department of Labour (where applicable) and that the monthly declarations (UI19) are submitted to the Department of Labour.

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Our payroll systems provide accurate monthly payslips and reports required for the monthly/annual statutory returns (EMP201 and WCA/OID), along with electronic IRP5s at the end of the tax year for your employees – no manual calculations required and saving you precious time!

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