COVID -19 Tax and Financial Benefits

Note: To qualify for provisional tax and PAYE deferral arrangements (see below) taxpayer/employer must be fully tax compliant and must have gross income less than R 100 million

Being fully tax compliant means:

  • Being registered for all required taxes.
  • Having no outstanding returns for any taxes registered for.
  • Having no outstanding debt for any taxes registered for.

VAT AND CUSTOMS DUTY RELIEF

On 27 March 2020 SARS announced that the importation of “essential goods” as defined in Regulation R.398 in Government Gazette No.43148 of 25 March 2020 will be exempt from VAT under Item 412.11/00.00/01.00 of Schedule 1 to the Value-Added Tax Act 89 of 1991. On 29 March, SARS included a full rebate of customs duty under rebate item 412.11 of Schedule No. 4 to the Customs and Excise Act 91 of 1964.

These include:

  1. Food
  2. Cleaning and Hygiene Products and ancillary products used in their production
  3. Medical and ancillary products used in their production
  4. Fuel, including coal and gas.
  5. Basic goods, including airtime and electricity

DEFERRAL OF PAYE PAYMENTS (EMPLOYEES’ TAX)

  • Payment of 35% of monthly PAYE liability to be deferred.
  • Deferral applicable from 1 April (i.e. relief applicable to April PAYE payable in May) to 31 July 2020.
  • PAYE amounts deferred to be payable to SARS over 6- month period 7 September 2020 to 5 February 2021.

SKILLS DEVELOPMENT LEVY (SDL) REPRIEVE

  • 4- month payment “holiday” provided for SDL (payable at rate of 1% of salaries).
  • 4-month period assumed to be same 4-month period applicable to employees’ tax deferment (April 2020 – July 2020).

DEFERRAL OF PROVISIONAL TAX PAYMENTS

  • First provisional tax payments falling due between 1 April 2020 and 30 September 2020 will only be based on 15% (previously 50%) of estimated total tax liability.
  • Second provisional tax payments falling due between 1 April 2020 to 31 March 2021, will be based on 65% (previously 100%) of estimated total tax liability.
  • Full amount of deferred provisional tax must be paid at time of third provisional payment.

R750 TAX SUBSIDY – EXPANSION OF EMPLOYMENT TAX INCENTIVE (ETI)

  • Monthly ETI claim amounting to R750 during period 1 April 2020 to 31 July 2020 for employees (earning less than R6, 500) from ages:
  • 18 to 29 who are no longer eligible for the ETI as employer has claimed ETI in respect of those employees for 24 months; and
  • 30 to 65 who are not eligible for the ETI due to their age.

EMPLOYMENT TAX INCENTIVE (ETI) ACCELERATION TO MONTHLY

  • SARS to accelerate payment of ETI reimbursements from twice a year to monthly.
  • Relief effective 1 April 2020 to 31 July 2020.

FAST-TRACKING VAT REFUNDS FOR SMALL VENDORS

  • Smaller VAT vendors (typically turnover less than R 30 million) in a net refund position temporarily to be permitted to file VAT returns monthly instead of once every two months, thereby unlocking input tax refund faster and immediately helping with cash- flow.
  • SARS currently working towards having systems in place to allow this in May 2020 for Category A vendors that would otherwise only file in June 2020.

CASE-BY-CASE APPLICATION TO SARS FOR WAIVING OF PENALTIES

  • Larger businesses (with gross income greater than R100 million) able to prove incapability of making payment due to COVID-19 disaster, may apply directly to SARS to defer tax payments without incurring penalties.
  • Similarly, businesses with gross income less than R100 million can apply for additional deferral of payments without incurring penalties.

DONATIONS TO SOLIDARITY FUND

  • Taxpayers making donations able to claim up to an additional 10% as a deduction from their taxable income.
  • Separate and additional tax deduction to be allowed for donations to solidarity fund. Therefore, taxpayers may potentially claim 20% tax deduction depending on who donations made to.

COVID-19 TEMPORARY EMPLOYEE/EMPLOYER RELIEF SCHEME, (C19 TERS), 2020

  • C19 TERS to pay a portion of cost of affected employees salary during temporary closure of businesses’ operations.
  • C19 TERS to remain in operation for a three-month period or until withdrawn by the Minister, whichever comes first.
  • Salary benefit capped to maximum of R17,712.00 per month, per employee and employee to be paid in terms of the income replacement rate sliding scale, (38% – 60%) as provided for by UI Act.

BUSINESS GROWTH AND RESILIENCE FACILITY, (BGRF)

  • BGRF available to SMMEs who locally manufacture or supply hygiene and medical products that are in demand to curb and manage spread of COVID-19 virus.
  • BGRF to offer working capital, stock, bridging finance, order finance and equipment finance.
  • Support based on funding needs of the actual business.

SMME RELIEF FINANCE FACILITY, (SMMERF)

  • SMMERF to provide soft-loan funding for existing businesses in distress due to the COVID-19 pandemic.
  • Online applications open from 2 April 2020 and assistance available for six months.