ETI is Not a Tax Deduction: It's a Monthly PAYE Refund

Many businesses misunderstand the Employment Tax Incentive (ETI). It is not a tax deduction you claim at year-end like Section 12H.

The ETI is a direct, monthly subsidy from the government designed to encourage youth employment. It functions as a cash-back mechanism that reduces your company's monthly PAYE tax liability. You claim it directly on your monthly EMP201 submission to SARS. If your ETI claim is larger than your PAYE bill, the extra amount can be refunded to you.

Who Qualifies for ETI?

To claim the ETI, both the employer and the employee must meet specific criteria.

The Employer Must:

• Be registered for PAYE with SARS.

• Have their tax affairs in order.

  
  

The Employee Must:

• Be between 18 and 29 years old.

• Have a valid South African ID.

• Earn a monthly remuneration of less than R7,500 (as of 1 April 2025).

• Be paid at least the National Minimum Wage.

• Not be a domestic worker or a "connected person" to the employer.

  
  

How Much Can You Claim?

The value is calculated monthly and is tiered. For a qualifying employee in their first 12 months of employment, the amounts are:

• Earns R2,500 - R5,499.99: You claim a fixed R1,500 per month.

• Earns R0 - R2,499.99: You claim 60% of their monthly wage.

• Earns R5,500 - R7,499.99: The amount tapers off as the wage increases.

  
  

This incentive halves for the second 12 months of employment.

The WPS Solution

White Paper Systems specifically recruits and places ETI-eligible learners. This means that, in addition to all the B-BBEE and tax benefits, you get an immediate, monthly cash-flow boost by hosting our candidates.

Contact us to find out how our learners can put money back into your bank account every month.