As part of the government’s COVID-19 relief measures, the ETI claimable by employers has been increased. These ETI measures are only applicable:
- For employers who were registered with SARS as at 1 March 2020.
- For the pay period 1 April 2020 – 31 July 2020.
- For qualifying employees.
The following table details the amount that can be claimed for ETI per qualifying employee under regular circumstances:
If you are a qualifying employer for the additional COVID-19 ETI and have enabled this on the system (as outlined below), then the following ETI rules supersede the regular ETI rules for qualifying employees for the period 1 April 2020 – 31 July 2020. The changes in ETI for the COVID-19 relief period are underlined.
As can be seen from the tables above, ETI was previously only claimable for 24 months. ETI can now also be claimed for April – July 2020 even if you have already previously reached the ETI 24-month limit.
ETI may only be claimed for qualifying employees. The additional ETI for COVID-19 relaxes the age criteria so that ETI is claimable for employees aged 18-65. There is currently insufficient information to suggest that the other criteria have been relaxed for the additional COVID-19 ETI. Therefore, the other criteria still need to be met, until otherwise indicated by SARS.
An individual is a qualifying employee for ETI if they:
- have a valid South African ID, Asylum Seeker permit or an ID issued in terms of the Refugee Act;
- are 18 to 29 years old (not applicable for additional COVID-19 ETI);
- were employed by the employer or an associated person to the employer on or after 1 October 2013;
- are paid the minimum wage applicable to that employer or if a minimum wage doesn’t apply, are paid a wage of at least R2 000 and not more than R6 500;
- are not a domestic worker; and
- are not a connected person to the employer.
*All of the above requirements must be met before you are eligible to claim ETI for an employee.
The first four aspects are handled automatically by the system based on how your employees are set up. It is, therefore, crucial to ensure that you have captured their birthdates, appointment dates and ID numbers correctly under their Basic Info section.
Enabling the Additional ETI Rules
Step 1: Enable Additional ETI
If you qualify for the additional ETI rules, you will need to indicate this on SimplePay. To do so:
- Go to Settings > Payroll Calculations > Additional ETI (COVID19).****
- Enter the Additional ETI Effective Date
- Click Calculate.
****NB! Do not configure any settings under Settings > Payroll Calculations > ETI unless the default wage minimum and maximum for ETI is specifically indicated as being different for your sector e.g. as a result of an agreement between SARS and a bargaining council.
Step 2: Unfinalise payslips*****
If you have already finalised payslips for April 2020, and wish to claim ETI for this period, you will need to unfinalise***** the payslips for this period before continuing onto step 3. If you have not yet finalised your payslips for April or will only be claiming ETI from May 2020, you can skip this step.
*****NB! We generally do not recommend unfinalising payslips as this can cause significant variances if regular items have been changed. Therefore, it is recommended that you take caution when doing this – ensure that you have saved a copy of all payslips, as well as the transaction history report for the period before unfinalising the payslips. You will then need to reconcile your new finalised payslips against the saved payslips used to pay employees.
Step 3: Enable ETI for the employee as of 1 April
If you have previously set your employee’s up on SimplePay for ETI, you can skip this step. If you have never claimed ETI before and now wish to do so, you will need to enable each qualifying employee for ETI (refer to the qualifying criteria above – remember, you will need to use your judgement for criteria 5 and 6 to determine whether the employee qualifies for ETI; the other criteria are determined automatically by SimplePay based on your inputs):
- Go to an employee’s profile
- Click on Edit Info > ETI
- Set their Status to ‘Allow’
- Enter the Effective from date as ‘1 April 2020’.
- Click Save
Step 4: Finalise payslips
When the additional ETI settings are configured, as well as the ETI settings for qualifying employees, the COVID-19 ETI rules will apply to all payslips for April – July 2020 once they are finalised, provided that the employee still meets all the qualifying criteria.
In addition to adjusting the ETI claimable (as outlined above), SARS has also accelerated the payment of ETI reimbursements from twice a year to monthly, in order to get cash into the hands of compliant employers as soon as possible.
ETI on Tax Certificates
The SimplePay system has been updated to incorporate these changes so that the various ETI amounts are reported under the correct SARS codes on the IRP5/IT3(a).
For more information on ETI, such as qualifying wages, visit our ETI help page here.