Government has announced several measures including tax incentives meant to help businesses and employees affected by the implementation of the 21-day lockdown.
The lockdown was implemented as a way to curb the spread of the Coronavirus (COVID-19).
Below tax experts from Mazars explain what it all means.
DEFERRAL OF PAYE PAYMENTS (EMPLOYEES TAX)
Aim of relief:
To assist businesses with liquidity in a time where business activity is likely to see an unprecedented decline in turnovers. The benefit of the measure is immediate cash flow relief that could enable businesses to survive.
Current law:
PAYE must be paid in full (i.e. 100% of calculated tax liability) within seven days after the end of the month during which the amount was deducted. If the last day for payment falls on a public holiday or weekend, the payment must be made on the last business day prior to the public holiday or weekend.
The relief:
SARS will allow the deferral of payment of 20% of the PAYE liability calculated on monthly EMP201 submissions to SARS, without SARS imposing administrative penalties and interest for the late payment thereof.
Period of relief:
PAYE payments falling due between the four-month period 1 April 2020 – 31 July 2020
How it works:
The deferred PAYE liability must be paid to SARS in equal instalments over the six-month period commencing on 1 August 2020 (i.e. the first instalment payment must be made on 7 September 2020).
Note that the six equal repayment amounts must be made in addition to the employer’s normal PAYE payments during the six month repayment period.
Employers that qualify for the relief
Any tax complaint business with an annual turnover not exceeding R50 million per year of assessment.
Employers that do not qualify for the relief
Any business who has failed to submit any return or has any outstanding tax debt or who has an annual turnover exceeding R50 million per year of assessment.
For more clarity on this relief measure, please select the following link: www.treasury.gov.za/comm_media/press/2020.pdf
DEFERRAL OF PROVISIONAL TAX PAYMENTS
Aim of relief:
Allowing for a deferred payment of provisional liabilities should assist businesses by providing additional cash flow during the COVID-19 crisis.
The relief:
The deferral of payment of a portion of the first and second provisional tax liability to SARS, without SARS imposing administrative penalties and interest for the late payment of the deferred amount.
Period of relief:
First provisional tax periods ending on or after 1 April 2020 but before 1 October 2020 and to second provisional tax periods ending on or after 1 April 2020 but before 1 April 2021.
How it works:
- First provisional tax payments
The first provisional tax payments falling due within the period 1 April 2020 to 30 September 2020 will only be based on 15% (previously 50%) of the estimated total tax liability.
- Second provisional tax payments
The second provisional tax payments falling due within the period 1 April 2020 to 31 March 2021 will be based on 65% (previously 100%) of the estimated total tax liability;
- Third provisional tax payments
In order to avoid interest being levied where taxpayers have deferred amounts in this manner, the full amount of provisional tax must be paid at the time of the third provisional payment.
Employers that qualify for the relief
Any tax complaint business with an annual turnover not exceeding R50 million (R5 million for individuals, subject to other requirements).
Employers that do not qualify for the relief
Any business who has failed to submit any return or has any outstanding tax debt.
For an example on how the relief will work, please select the following link: www.treasury.gov.za/comm_media/press/2020
R500 TAX SUBSIDY – EXPANSION OF THE EMPLOYMENT TAX INCENTIVE AGE ELIGIBILITY CRITERIA AND AMOUNT CLAIMABLE
Aim of relief:
The introduction of a tax subsidy to employers of R500 per month for those private sector employees earning below R6,500 per month utilizing the current Employment Tax Incentive (the ETI).
Current law:
The ETI programme makes provision for the employer to claim the ETI in respect of a qualifying employee:
- Who is between the ages of 18 and 29; and
- Has a monthly remuneration of less than R6 500.
The maximum monthly ETI currently claimable per qualifying employee is limited to R1 000 in the first year of employment and R500 in the second year of employment. Further to the above, the monthly ETI can only currently be claimed for the first 24 months of the qualifying employee’s employment by an employer or associated institutions.
The relief:
Do any of your employees earn less than R6,500 per month? If so, this benefit will apply to you. There will be a tax subsidy of R500 per month for the next four months for employees in the private sector who earn less than R6 500 per month. This will be implemented under the current the ETI scheme in addition to current ETI amounts claimed.
If the ETI amounts claimed on the monthly EMP201 declaration exceeds the employee’s tax payable, the employer can claim a refund from SARS monthly.
Period of relief:
The relief will take effect from 1 April 2020 and ending on 31 July 2020.
How it works:
- Allowing
a monthly ETI claim in the amount of R500 during this four month period for
employees (earning less than R6, 500) from the ages of:
- 18 to 29 who are no longer eligible for the ETI as employer has claimed ETI in respect of those employees for the 24 months; and
- 30 to 65 who are not eligible for the ETI due to their age.
Employers that qualify for the relief
Any tax complaint business who employ workers who earn less than R6 500 per month.
Employers that do not qualify for the relief
Any business who has failed to submit any return or has any outstanding tax debt.
Important: This relief/expansion will only apply to employers that were registered with SARS at or before 1 March 2020 (i.e. employers who registered as employers with SARS after 1 March 2020 will not be eligible for the relief). Further to the above, the current compliance requirements for employers under sections 8 and 10(4) of the ETI Act will continue to apply.
For an example on how the relief will work, please select the following link: www.treasury.gov.za/comm_media
Mazars Port Elizabeth has several specialists that can deal with these matters timeously and decisively. Please email any queries you may have in this regard to PLZ.TaxConsulting@mazars.co.za.