SMME NEWS - DEC 2017 ISSUE

21 December 2017
SMME, what you should know
SMME
NEWS
5
By Oyewo Adetola
Elizabeth
On the 14th of
November 201
7, SMME News
took interest as the
Employment Tax Incentive
(ETI) was presented at the
Towns and Gown event which
was held at the Standard Bank
Centre in Durban. The ETI
legislature was introduced in
January 2014, to encourage
employers to hire young people
by reducing the PAYE (Pay As
You Earn) tax payable to SARS,
in turn reducing the cost of
employment to the employer
while leaving the employee’s
earnings unaffected. The aim
of the ETI is to facilitate the
increase employment of young
work seekers who are excluded
from participating in economic
activity, and as a result suffer
disproportionately from
unemployment, discouragement
and economic marginalisation.
This presents a win-win
situation for both small
businesses and their potential
Understanding the
Employment Tax Incentive (ETI)
employees; and SMMEs can
take advantage of this incentive
in strategically positioning
their businesses financially
for minimal tax payments to
SARS. Apart from reduced tax
payments to SARS, the other
benefits of ETI to your business
are:
1. Employers will be able to
claim the incentive for a 24
month period for all employees
who qualify.
2. The incentive amount differs
based on the salary paid to
each qualifying employee and
whether the qualifying employee
was employed after the
inception of the ETI programme
on 1 October 2013. ETI may
only be claimed for a total of 24
qualifying months.
3. This incentive will
complement existing
government programmes
with similar objectives e.g.
learnership agreements.
The employer is eligible to
claim the ETI if the employer is
registered for Employees’ Tax
(PAYE), or is eligible to register
for PAYE, meaning that the
employer can’t register just to
claim ETI, other registration
requirements must be met.
The employer must not in the
national, provincial or local
sphere of government; not
be a public entity listed in
Schedule 2 or 3 of the Public
Finance Management; not be
a municipal entity; and lastly
not be disqualified by the
Minister of Finance due to the
displacement of an employee or
by not meeting the conditions
as may be prescribed by the
Minister by regulation.
An individual is a qualifying
employee if he or she has a
valid South African ID, Asylum
Seeker permit or an ID issued in
terms of the Refugee Act; is 18
to 29 years old; is not a domestic
worker; is not a “connected
person” to the employer; was
employed by the employer or
an associated person to the
employer on or after 1 October
2013 and is paid the minimum
wage applicable to that employer
or if a minimum wage doesn’t
apply, is paid a wage of at least
R2 000 (where the qualifying
employee was employed for 160
hours in a month) and not more
than R6 000 remuneration.
So as a business owner how do
you apply for ETI? The employer
has to calculate their ETI and
claim it every 12 months. The
value of the ETI the employer
may claim depends on the value
of the monthly remuneration
paid to the qualifying employee.
If the employee has worked less
than 160 hours in the month,
the remuneration amount must
be ‘grossed up’ to 160 hours per
month to calculate the value of
the ETI. The amount can then
be calculated and be ‘grossed
down’ in the same ratio. There
is no limit to the number of
qualifying employees that an
employer can hire.
For more information about
the ETI visit your nearest SARS
office, www.sars.gov.za or call
0800 00 7277.
Personal Money needs to be separated from Business Money
By Oyewo Adetola
The BMF (Black Management Forum)
seminar tagged ‘Youth entrepreneurship,
innovation and Skills Development’, was
held at Nedbank Head office in Durban,
Thursday 30 November 2017. The aim of
the seminar was to unearth insights and
develop smart strategies to help young
entrepreneurs to get ahead in business.
‘This is because there is increase from
26% unemployment rate to 27% and high
rate of stay at home graduate. We live in
VUCA, an acronym for Volatile Uncertain
Complex Ambiguity’ world, which can
be overcome by VUCA, an acronym for
Vision Understanding Clarity Agility’ were
the words of Melanie Reddy, Nedbank
KZN provincial Manager-Relationship
Banking.
Lindani Hlongwane, BMF eKasi
Chairperson identified constraints to selfemployment
as lack of financial, human
and social capital as a result of lack of
youth exposure to entrepreneur culture.
He also reiterated the importance of nonreliance
on one source of cash flow and
defining your niche market. ‘Opportunities
are everywhere, you just need to find your
niche market and specialize’ he says.
The reasons SMMEs do not survive within
the one year of existence is financial
indiscipline, Telavukosi Mabasa, Nedbank
Public Affairs Manager, highlighted
accelerating women empowerment and
overcoming challenges pertinent to women
in business -‘We are not the bad guys
because we do not lend money’, Melanie
Reddy says. The reasons for loan decline
is that banks do not borrow people who
are at high risk based on credit scoring
record obtainable from Transunion
who verify credit records and scores.
Transunion verify credit record and scores
an individual which lenders use to make
lending decisions when borrowing.
Credit score is a number that reflects the
likelihood of a borrower paying back a
credit. Lenders like banks and credit card
companies look at credit history when
they calculate credit scores which will
show them the level of risk in lending to
a borrower. This can be information from
credit hubs such as insurance life cover
and Jet/Edgars credit account. The key
lessons for nurturing entrepreneurship
include delayed gratification, mentorship,
and financial discipline. Intervention for
inculcating a culture of entrepreneurship
includes entrepreneurial programmes,
microfinance, financial literacy
programmes, networking and mentoring
between established and emerging
entrepreneurs.
‘Managing money is a culture that should
be developed from childhood through
piggy bank’, Thembinkosi Mtshali,
Nedbank Sales Support Manger, says. So
if you want to register your company with
CIPC, Nedbank will register it at the cost
R1750 with an added advantage of a BEE
certificate. Nedbank also offers a financial
literacy programme to your organization.
SMEs can also log on to simplybiz.co.za to
ask questions, spark discussion, get advice,
share your stories, promote and build a
like-minded network in their business
journey