Youth Day: How Your Business Can Benefit from the ETI

Youth Day on 16 June is more than a commemorative date – it’s a timely reminder of the value that young people bring to South African businesses. It also presents a strategic opportunity for companies to access meaningful financial support through the Employment Tax Incentive (ETI).

If you’re managing business finances, running a small business, or launching a start-up, then this is a window you can’t afford to ignore. The ETI is not just a tax break – it’s a powerful tool that allows you to strengthen your workforce while reducing employment costs.

Why Young Employees Are a Business Asset

Young people bring fresh energy, digital confidence, and adaptability – all qualities essential for businesses navigating a fast-changing economy. Consider these advantages:

• Tech-Savvy: Young employees are typically more comfortable with software, systems, and digital tools – from project management apps to accounting software.
  
  
• Creative Problem-Solving: They offer new perspectives, question outdated processes, and help drive innovation.
  
  
• Adaptability: Youth tend to adjust quickly to change, which is crucial for businesses evolving in uncertain environments.
  
  
• Quick Learning: Recently educated and eager to apply their skills, young professionals are often fast learners.
  
  
• Team Energy: The enthusiasm and drive they bring can uplift your team’s productivity and morale.
  
  
• Market Awareness: Young employees help businesses stay relevant to the growing millennial and Gen Z customer bases.
  
  

Jack Ma once said, “Trust the young people; trust this generation’s innovation.” He wasn’t wrong.

How the ETI Helps Businesses Cut Costs

The Employment Tax Incentive rewards businesses for hiring young people by allowing them to claim a portion of employment costs back – effectively reducing their monthly PAYE (Pay-As-You-Earn) liability.

Here’s how it works:

• Employers claim the ETI by reducing their PAYE obligations for each qualifying employee.
  
  
• The incentive can be claimed for up to 24 months per employee.
  
  
• There’s no limit to how many qualifying young employees you can hire.
  
  

This allows your company to hire more staff without inflating salary costs, while also investing in future talent.

ETI Breakdown: What You Could Claim (from 1 April 2025)

Example: Hiring a qualifying employee at R2,500 per month can reduce your PAYE bill by R1,500 per month for the first year, and R750 per month in the second year.

Who Qualifies for the ETI?

Employers must:

• Be registered for PAYE
  
  
• Not be a public entity or part of government
  
  
• Not have displaced existing employees to hire ETI-qualifying workers
  
  

Employees must:

• Be aged 18 to 29 (unless working in a Special Economic Zone)
  
  
• Have a valid South African ID, Asylum Seeker permit or Refugee ID
  
  
• Earn at least the minimum wage (or R2,500 where no minimum applies), and not more than R7,500 per month
  
  
• Be employed on or after 1 October 2013
  
  
• Not be a domestic worker or related to the employer
  
  

ETI Pitfalls to Avoid

While the ETI offers strong financial rewards, it does come with a few common risks:

• Claiming for ineligible employees
  
  
• Incorrect ETI calculations
  
  
• Failing to update the claim after the first 12 months
  
  
• Not maintaining correct payroll and employment records
  
  
• Misinterpreting the definition of “monthly remuneration”
  
  

Penalties for incorrect claims can be steep, ranging from fixed fines to 100% of the incorrectly claimed amount, and understatement penalties under the Tax Administration Act.

Why Professional Support Matters

Administering the ETI correctly requires an up-to-date understanding of tax law and employment regulations. That’s where professional support from your bookkeeper, accountant, or financial advisor becomes critical.

A qualified tax professional can:

• Identify which employees qualify for the ETI
  
  
• Ensure your salary calculations meet SARS requirements
  
  
• Track and adjust claims over time
  
  
• Maintain compliant records
  
  
• Support you in case of a SARS audit or compliance check
  
  

Working with professionals not only minimises risk, it also helps you extract maximum value from the incentive – and from the young talent powering your business.

Let’s Maximise the Opportunity Together

If you’re ready to boost your workforce, manage employment costs more effectively, and support the next generation of South African professionals, the ETI is the perfect tool. We’re here to help you navigate the application, calculation, and compliance process with confidence.

Contact BGR today to explore how the ETI can benefit your business.