ETI conditions beyond age: who does not qualify

The employer and employee conditions for South Africa's Employment Tax Incentive besides age, the pay ceiling, and the special economic zone exception.

By Achekam · 11 October 2026 · 5 min read · For Running a business businesses in South Africa

Ask a business owner who qualifies for the Employment Tax Incentive and the answer is nearly always "staff between 18 and 29". Age is the condition everyone knows. It is also only one of several, and an employee who fits the age range can still be excluded for reasons that have nothing to do with how old they are.

Claiming for someone who does not qualify is not a small slip: the incentive reduces the PAYE you pay over, so a wrong claim is tax underpaid. This article goes through the other conditions SARS lists, for the employer and the employee, the pay ceiling and how hours affect it, and the one situation where the age limit falls away.

First, can the business claim at all?

SARS says an employer can claim the Employment Tax Incentive only if it is registered for PAYE and is not a government, municipal or listed public entity. It may claim for a maximum of 24 months per qualifying employee.

The PAYE registration point catches small employers who pay staff without being registered. Registration comes first; the incentive follows. The 24-month cap is counted per employee, so keep track of how many qualifying months you have claimed for each person.

The employee conditions besides age

SARS says a qualifying employee must:

• hold a valid South African ID, asylum seeker permit or refugee ID. A foreign national on another type of permit does not qualify, however long they have worked for you;
• be 18 to 29 years old, with the exception covered below;
• not be a domestic worker. A household employee does not qualify even if every other condition is met;
• not be a connected person to the employer. "Connected person" is a defined term in tax law, so check how it applies to relatives of the owners;
• have been employed on or after 1 October 2013.

The connected-person exclusion is the one most often missed in family businesses, where a son, daughter or cousin of the owner may be the first young person hired. If you are unsure whether someone counts as connected, ask your accountant before you claim, not after.

The pay ceiling and the hours rule

Pay matters as well as status. SARS says that from 1 April 2025 the incentive applies to employees receiving remuneration of less than R7 500 a month, up from R6 500 previously. For monthly remuneration of R2 500 to R5 499.99, the incentive is R1 500 a month in the first 12 months and R750 a month in the second 12 months.

SARS published those amounts in a March 2025 update on the amendments, which it said would apply provided Parliament passed the legislation. The Employment Tax Incentive Act as amended by Act 3 of 2026 is in operation from 1 April 2025. Below R2 500 the incentive is a percentage of pay, and above R5 500 it tapers to nil at R7 500. These figures are correct at the time of writing; check SARS's current position each tax year.

The same update notes that employees working under 160 hours a month are grossed up to 160 hours to calculate the incentive. In plain terms, for someone who works fewer hours, the calculation starts from what their pay would be for 160 hours rather than from what they actually earned. Ask your accountant how this plays out for a particular part-time employee.

The special economic zone exception

The age limit is the only condition with a geographic exception. SARS's ETI questionnaire says the 18-to-29 age limit does not apply to employees of a business operating from a fixed place inside a designated special economic zone who render services mainly within that zone.

The same questionnaire says the Minister of Finance designated six special economic zones from 1 August 2018 for ETI purposes: Coega, Dube Trade Port, East London, Maluti-A-Phofung, Saldanha Bay and Richards Bay. Two cautions apply. SARS says the questionnaire is a guide only and not a legal reference, and the page was last updated in 2021, so confirm the current list of designated zones before relying on it. And the exception removes only the age limit; every other condition still applies.

SARS's ETI questionnaire for working out whether you qualify takes you through the conditions question by question and is a sensible first check for each new hire.

Recording why each employee qualifies

Achekam calculates the Employment Tax Incentive per qualifying employee per month for an employer that chooses to claim it, and it refuses months before April 2025. The calculation runs once the business enters that year's minimum wage per hour on the tax table; without that figure nothing is claimed.

The judgement about who qualifies is still yours. Achekam works out the amount; it does not interview your staff about their permits, their family ties or where they mainly work. So keep a short qualification note for each employee you claim for, filed with their payroll record:

Review it whenever someone's circumstances change, such as a new permit or a move to a role outside the zone. For how the incentive then flows into the monthly declaration, see the monthly EMP201 and the Employment Tax Incentive; for what happens if a claim is wrong, see ETI penalties for low pay and displaced workers. A month you forgot to claim can sometimes be recovered, as explained in claiming ETI you forgot in an earlier month.

One note per hire

Make the qualification note part of onboarding: when a young employee starts, complete it before their first pay run. It takes minutes, and it turns every incentive claim from an assumption into something you can show.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.