This page presents details on some of the tax and UIF measures being instituted by the SA government in response to the Covid-19 lockdown:
- Employee Tax Incentive, deferral of PAYE payment & Provisional Tax calculation and deferral
- Temporary employer/employee relief scheme (TERS)
- Summary of Interventions & Relief Measures Available as well as Certain Additional Tax Reliefs
1. Employee tax incentives, deferral of PAYE, and provisional tax calculation and deferral
2 April 2020
Due to the Covid- 19, SARS has NOT extended any deadlines for submission of any returns in relation to any of the Tax Acts.
However certain relief for Employer PAYE and Provisional Tax has been introduced for all TAX COMPLIANT entities , as follows:
PAYE TAX RELIEF FOR EMLOYERS, whose Employees earn below R 6 500 per month.
A new Employment Tax Incentive (ETI) has been introduced for the four months form 1st April to 31st July 2020.
The current ETI remains in place, however with an increase amount of R 1 500 per employee, per month, in the first year (previously R 1 000) and for employees in the second year the increased amount is R 1 000 ( previously R 500).
With the new ETI introduced, it also allows for employees earning below R 6 500, even if the two year allowance has been used up as per the existing scheme and furthermore it now allows employees up to the age of 65 years.
Therefore in these cases R 500 per employee, per month can be claimed to reduce entities monthly PAYE liability.
Employees that are not being paid, due to the temporally lay off, can claim via the UIF mechanism. This we will communicate with you separately , if necessary , as information comes in, However employers can e mail email@example.com for further information and procedures.
Furthermore a 20% delay in payment of employees tax liabilities will be allowed over the next four months, without penalties & interest being levies.
PROVISIONAL TAX RELIEF
Currently first Provisional Tax payment is made with 50% of the total estimated tax liability for the year and the balance made with the second Provisional Tax payment.
The new proposal for TAX COMPLIANT entities from 1st April 2020 to 31st March 2021, is as follows:
- First Provisional Tax payment can be based on 15% of the total estimated tax liability for the year.
- Second Provisional Tax payment can be based on the accumulative total of 65% of the total estimated tax liability for the year. This means that the 1st & 2nd Provisional Tax payment needs to amount to 65% of the total due.
- Thus the remaining 35% tax liability due, needs to be paid via the 3rd Provisional Tax, which will be six months after year end, to avoid interest being charged.
Business Grants are also being offered by the DTI for entities supplying or intend supplying essential goods.
For Debt Relief entities can visit the Small Business Development website on www.smmesa.gov.za
Loans at favourable rates and terms are being introduced by the four major banks, whereby you can contact the banks directly
We need to stress the fact that the above reliefs can only be applied for by entities that are TAX COMPLIANT.
2. Temporary employer/employee relief scheme (TERS)
21 April 2020
Many of you are currently concerned of how employees will be paid during the lockdown period and employees would therefore seek to obtain some relief form the UIF department.
The normal method of claiming from the UIF department has currently been replaced by a different process due to the vast number of affected employees. A new scheme has now been introduced, for a three month period, referred to as the TEMPORARY EMPLOYER/EMPOLYEE RELIEF SCHEME (TERS).
The TERS scheme will therefore pay the employer on a varying sliding scale, once all required documents have been submitted to the department and thereafter, you the employer would need to transfer these funds to the respective employees.
There was a delay in communicating this with you as the regulation in this regard were changing on a daily basis and further changes are anticipated. However we could not delay in informing you as one of the recent changes indicated that, you the employer need to apply before the Lockdown is lifted.
Therefore to obtain the required documents, all employers need to send a blank e mail to firstname.lastname@example.org and thereafter the UIF department will send you all the details and documents in their required format for your application.
In addition to this a report of closure of business is require in writing, on your official letterhead , addressed to Department of Employment and Labour, with the following suggested wording:
- “We (company name) hereby wish to inform you that we have closed our business as a direct cause of the Covid-19 pandemic in order to enforce the lockdown regulations. As a result of the pandemic we have fallen under serious financial distress and will therefore not be able to pay any remuneration to our employees during this period of the lockdown, and thereafter until we have recovered financially. We wish to claim benefits from the Covid-19 Temporary Employee/Employer Relief Scheme as promulgated by the Minister of Employment and Labour in GG 43161 dated 26 March 2020.”
Key Documents Required :
- Letter of Authority, on an official entity’s letterhead, granting permission to an individual of the entity to claim on behalf of the entity. (The labour department will provide you with a template in this regard.)
- MOA ( Memorandum of Agreement between yourself & the UIF department) , which is only applicable to employers that has more than 10 employees. (This will be send to you by the labour department.)
- Prescribed template (spread sheet) with critical employee details to be completed. (This will be send to you by the labour department.)
- Evidence/Payroll as proof of last three months employee(s) salary(ies).
- Confirmation of bank account details in a form of certified last bank statement.
The above to be submitted to Covid19UIFclaims@labour.gov.za upon completion.
Kindly note the following:
- Employers wishing to claim are required to open a new or cleaned out bank account, separate from its current operating bank account, dedicated to receiving and paying received funds from UIF to employees. Confirmation of such bank account to be obtained in a form of a certified latest bank statement.
- The minimum wage per employee also need to be determined in your respective industry or trade, which could be obtained from your respective Seta of your industry or trade.
- TERS applies to employers who are facing distress on lockdown and who are unable to pay salaries. Therefore there must be an inability to pay salaries as opposed to a loss of income and the financial distress must result specifically from the lockdown as opposed to Covid-19.
- Employers will need to have been registered with the UIF department and in possession of a valid UIF number.
- The benefit applies to employers who had to close their business, due to Covid-19, for a period of three months or a lessor period.
Please note that as we are currently in an ever changing environment, more changes to the scheme are anticipated and we are only communicating with you information that we currently have on hand.
If you need help with your tax, UIF and business issues related to Covid-19, contact us now.
3. Summary of Interventions and Relief Measures + Additional Tax Relief
6 May 2020
With our Third Issue of Covid -19, we have listed below a Summary of Interventions and Relief Measures, with respective website Links. Different funding applies to different sectors of the economy and different needs, as one size does not fit all.
Funds are made available to small and medium size business that require Debt Fund Relief or Business Growth/Resilience Facility.
Funding available only to South African–owned business to help vulnerable business and fast- track funding for business that are considered vital for addressing the impact of the Covid-19 pandemic.
Tourism Relief Funding
To assist SME’s in the tourism and hospitality sector.
Link : https://www.tourism.gov.za/Currentprojects/Tourism Relief Fund for SMMEs/Pages/Tourism Relief Fund for SMMEs.aspx
Agro-Processing Support Scheme
To stimulate investment by SA.
Black Industrialist Scheme
The scheme offers a grant on a cost sharing basis and is administrated by the DTI.
COVID-19 SME Fund
To aid small and medium enterprises. These funds are form the Rupert family and Remgro and are administered by Business Partners, known as the Sukuma Relief Programme .
Administered by the National Employment Fund , available for black entrepreneurs to manufacture and supply a range of medical and healthcare safety products.
SA Future Trust (SAFT)
To support SMME employees at risk of losing their jobs or loss of income. Applicants to apply directly to one of the four major Banks.
Link : https://opp-gen.com/saft/
Solidarity Response Fund
Set up by SA Government to alleviate suffering & distress.
The four major banks has released their own intervention for assistance and these banks are ABSA, FNB, Nedbank & Standard Bank.
The Minister of Trade, Industry and Competition has issued a Block Exemption for Retail Property Sector.
The Block Exemption exempts a category of agreements or practices between designated retail property tenants and landlords.
Additional Tax Relief Measures
For tax compliant business, to assist with their current cash flow, are thus far as follows :
- Skills Development Levies: From 1st May 2020, there will be a four month holiday for skills development levy contributions to assist business with their current cash flow
- Fast-tracking of value added tax (Vat) refunds: Smaller Vat vendors that are in a net Refund position will be temporarily permitted to submit monthly returns instead of two monthly returns, thereby unlocking the vat refunds faster and immediately to assist with current cash flow.
- Three month deferral for filing & first payment of carbon tax: First payment of this tax had a payment date of 31st July 2020, which has now been deferred to 31st October 2020.
- Excise tax deferral: A deferral for the payment of excise taxes on alcoholic beverages and tobacco products.
- Postponing the implementation of some of the 2020 Budget measures such as: a) Restricting net interest expense deduction to 30% of earnings. b) Limiting the use of assessed loss carried forward to 80% of taxable income. Both of the above measures were to be effective for years of assessment on or after 1st January 2021 and now moved to 1 January 2022.
- Increasing the Deduction available for Donations to the Solidarity Fund: Tax deductions allowed for donations made by an entity is currently limited to 10% of the entities taxable income. This will now be increased to 20% for donations made to the Solidarity Fund during the 2020/21 tax year.
Every effort has been made to provide you, our valued client, with current information made available to us , however we do not take any responsibilities or any inaccuracies or misstatements as our research on this, has been from information that is coming through from various organisations. Only at a later stage will certain, of these changes be promulgated.