“Employee” definition of section 1 of ETI

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“employee” means a natural person-

(a)     who works for another person and in any other manner directly or indirectly assists in carrying on or conducting the business of that other person;

(b)     who receives, or is entitled to receive remuneration from that other person; and

(c)     who is documented in the records of that other person as envisaged in the record keeping provisions in section 31 of the Basic Conditions of Employment Act, 1997 (Act 75 of 1997),

but does not include an independent contractor;

[Definition of “employee” substituted by section 58(1)(a) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]

“Associated person” definition of section 1 of ETI

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“associated person”, in relation to an employer-


(a)     where the employer is a company, means any other company which is associated with that employer by reason of the fact that both companies are managed or controlled directly or indirectly by substantially the same persons;


(b)     where the employer is not a company, means any company which is managed or controlled directly or indirectly by the employer or by any partnership of which the employer is a member; or


(c)     where the employer is a natural person, means any relative of that employer;

Section 10 (ETI) – Reimbursement

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10    Refund

(1)     At the end of the period for which the employer is required to render a return in terms of paragraph 14(3)(a) of the Fourth Schedule to the Income Tax Act, a refund of an amount equal to the excess contemplated in section 9(1) must be claimed from the South African Revenue Service in the form and manner and at the time and place prescribed by the Commissioner for the South African Revenue Service.

(2)     A refund contemplated in subsection (1) must be paid in accordance with section 190(1)(a) of the Tax Administration Act to the employer from the National Revenue Fund and be treated as a drawback from revenue charged to the National Revenue Fund.

(3)     Where an employer has claimed the refund in terms of subsection (1), the amount of the excess in respect of the period to which the refund relates must be deemed to be nil in the month immediately following that period.

(4)     The refund contemplated in subsection (1) payable to an employer may not be paid to that employer if the employer-

(a)     has failed to submit any return contemplated in section 8(a); or

(b)     has any tax debt contemplated in section 8(b).

(5)    Where-

(a)     an employer has claimed a refund in terms of subsection (1); and

(b)     the refund contemplated in subsection (2) was not paid in terms of subsection (4),

that refund must be paid to an employer during any month in the period for which the employer is required to render a return in terms of paragraph 14(3)(a) of the Fourth Schedule to the Income Tax Act subsequent to the period contemplated in subsection (1) in the first month during that period in which the employer is not subject to subsection (4).

(6)     Where a refund contemplated in subsection (2) is not paid by virtue of subsection (4) and (5) that refund must be deemed to be nil at the end of the period contemplated in subsection (5).

[Section 10 amended by section 118(1) of Act 43 of 2014, by section 6(1)(a)-(d) of Act 13 of 2020 and by section 142(1) of Act 25 of 2015 and substituted by section 30(1) of Act 16 of 2022 deemed effective on 1 September, 2022, and applicable to any return, for purposes of paragraph 14(2) of the Fourth Schedule to the Income Tax Act, submitted or after that date]

Section 9 (ETI) – Roll-over of amounts

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9      Roll-over of amounts

(1)     Subject to subsection (4) and section 10(3), if in any month the amount of the employment tax incentive available to an employer exceeds the amount payable by the employer in respect of employees’ tax, the amount of the employment tax incentive by which the employees’ tax may be reduced in the succeeding month must be increased by adding the amount of that excess to the amount of the employment tax incentive that is available in that succeeding month.

(2)     If an employer does not reduce employees’ tax in the amount of the employment tax incentive despite that amount being available to that employer, the sum of the amounts by which the employer would have been entitled to reduce employees’ tax must be treated as an excess contemplated in subsection (1) in the first month that the employer reduces employees’ tax in the amount of the tax incentive available to the employer.

(3)     If, by virtue of section 8, an employer may not reduce employees’ tax in the amount of the employment tax incentive available to that employer, the sum of the amounts by which the employer would have been entitled to reduce employees’ tax payable by that employer if the employer had not been subject to section 8 must be treated as an excess contemplated in subsection (1) in the first month that the employer is not subject to section 8.

(4)     Any amount as contemplated in subsection (2) or (3) on the first day of the month following the end of the period for which the employer is required to render a return in terms of paragraph 14(3)(a) of the Fourth Schedule to the Income Tax Act, must be deemed to be nil in respect of each qualifying employee employed by the employer on that date.

[Subsection (4) deleted by section 117(1) of Act 43 of 2014, added by section 96(1) of Act 15 of 2016 and substituted by section 70(1) of Act 23 of 2020 deemed effective on 31 July, 2020]