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February : Guide to Implementation of Employment Tax Incentive or “Youth Wage Subsidy”

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26 February, 2014

Guide to Implementation of Employment Tax Incentive or “Youth Wage Subsidy”


The Act is intended to encourage greater private sector employment through a tax incentive that would reduce the employer's costs of hiring young and less experienced work seekers. The Act entitles employers to recoup some of the costs involved in hiring qualifying youth employees or employees of any age operating within a special economic zone or designated industry. The benefit is calculated according to a prescribed formula for the first and second year of employment, with the benefit lapsing after 24 qualifying months within the next 3 years (1 January 2014 to 31 December 2016). In order to realise the benefit, the Act allows the employer to reduce the total monthly employee's tax (PAYE) which the employer is obliged to pay to SARS on behalf of all his employees. If the total benefit in respect of all the qualifying employees exceeds the amount of PAYE payable by that employer in any given month, the excess can be rolled over to the next month, and the month thereafter for a total period of 6 months, after which the total exceeding amount can be claimed and must be refunded by SARS. The amount claimed will in terms of section 10 (1) (s) of the Income Tax Act qualify as exempted income. This means that that any benefit received in terms of this Act will not be taxable income.

Download the PDF document:
Summary of the employment tax incentive act  jan 2014 certified by SARS final