The South African Revenue Service (SARS) has reminded employers that the legislation that set up the Employment Tax Incentive from January 1 this year also includes a refund process.
The Employment Tax Incentive Act and the draft amendments to this Act in terms of the Draft Taxation Laws Amendment Bill, 2014, allows for the introduction of a refund process that will refund employers the amount of the allowable ETI that wasn’t used to reduce the Employees’ Tax amount payable at the end of each six month reconciliation period (1 March to 31 August and 1 September to 28/29 February).
An ETI refund will only be paid if an employer is tax compliant. This means that all tax returns have been submitted and there is no outstanding tax debt, when the Employer Reconciliation documents [EMP501 and IRP5/IT3(a)s] are received and processed by SARS.
A non-compliant employer will have six months from the start of the next reconciliation cycle (1 September to 28 February or 1 March to 31 August in respect of the interim and annual reconciliations) to correct any non-compliance and be able to receive the ETI refund. If the employer doesn’t become compliant by the end of the next six month reconciliation period, 28 February or 31 August, the ETI refund will be forfeited.
The refund process is expected to be introduced in the last quarter of 2014 and a final pay-out date will be announced soon.
