Employment Incentive Tax (ETI) Refund Process

Employment Incentive Tax (ETI) Refund Process

How does it work?

The Employment Tax Incentive Act and the draft amendments to this Act in terms of the Draft Taxation Laws Amendment Bill, allows for the introduction of a refund processs that will refund employers the amount of the ETI that’s allowable.
An ETI refund will only be paid out if an employer is tax compliant. All tax returns must be submitted and there is no outstanding tax debt when the Employer Reconciliation documents are received and processed by SARS.

When was the ETI refunds processs implemented?

The refund process was introduces in the last quarter of 2014 and a final payout date will be announced by SARS.

Important facts about ETI refunds:

  1. ETI not used at 28 February 2014
    • Any amount of ETI not used to reduce the Employees’ Tax amount payable at 28 February 2014 could be included as an ETI carried forward amount.
    • This amount could be included in the ETI brought forward amount on the March 2014 (201403) EMP201.
    • This is the only time a rollover amount will be carried forward to the next reconciliation period.
      • This was necessary as no refund will be paid for an ETI carry forward amount at the end of February 2014.
  2. ETI not used at 31 August 2014
    • “ETI not Utilised” amount on the August (201408) Employer Reconciliation Declaration
    • This amount won’t be allowed to be carried forward as the “ETI Brought Forward” amount on the September (2014-09) Monthly Employer Declaration
    • The “ETI Brought Forward” amount on the September (2014-09) EMP201 must be zero.
  3. ETI Errors
    • ETI not claimed or under-claimed in a previous month (including January and February 2014)
      • Where an ETI amount was not claimed or a lower amount than the qualifying amount was claimed, the shortfall must be claimed in the month during which the error is realised.
      • Include the amount (not claimed/shortfall) on the current month’s EMP201 under “ETI Calculated”.
      • The ETI information on the Employee Tax Certificates [IRP5/IT3(a)s] for that month must NOT be changed to include the ETI information of the previous month.
    • ETI over-claimed in a previous month:
      • Where a higher ETI calculated amount was claimed than the qualifying amount, a revised EMP201 must be submitted for that period.
      • If the error is realised, after the EMP501 has been submitted, the ETI information on the relevant IRP5/IT3(a)s must be corrected and resubmitted together with the revised EMP501.
  • Except for the March 2014 (2014-03), the “ETI Brought Forward” amount for March and September must always be zero.
  • Any “ETI Carried Forward” amount at the end of the reconciliation periods, will be refunded, only if the employer is tax compliant.