Demand-ranked tax questions · Employer · Question 13 of 20
What is ETI and does my business qualify?
The Employment Tax Incentive reduces PAYE for an eligible employer that hires a qualifying employee. The employee is commonly aged 18 to 29, holds an accepted identity document, is not connected to the employer, meets wage rules and earns no more than R7,500 a month. ETI can be claimed for up to 24 qualifying months per employee.
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The points that decide the answer
- The employer must be registered for PAYE and must not be disqualified.
- Age restrictions can differ for qualifying special economic zone employment.
- Employees working fewer than 160 hours require gross-up and gross-down calculations.
- Incorrect claims can create PAYE shortfalls, penalties and interest.
A practical way to handle it
- Validate employer eligibility and tax compliance.
- Test every employee against identity, age, relationship, wage and start-date rules.
- Calculate ETI from payroll data each month.
- Reconcile monthly claims to the EMP501 and employee certificates.
Common mistakes
- Claiming for a connected person
- Ignoring minimum-wage rules
- Carrying ETI beyond 24 qualifying months
What to keep on file
IDs, contracts, hours, remuneration, payroll calculations, EMP201s and EMP501 reconciliations.
Source and scope
Based on current SARS guidance, reviewed on 28 August 2026. This is general information, not tax advice. Rates, thresholds and outcomes depend on the tax year and your facts. Regulated submissions and advice are handled through registered partners where required.
When must a business register for PAYE, UIF and SDL? Read the related guide