COVID-19 Debt Relief Interventions for SMMEs
1 April 2020
How SA Banks are helping your business through COVID-19
17 April 2020SARS MEASURES TO ASSIST DURING COVID-19
The South African Revenue Services (SARS) has come to the party to assist businesses to combat COVID-19. These measures are specifically designed to deal with the pandemic, and they are over and above the tax proposals made in the 2020 Budget.
SARS has promised business that they will be paying out tax refunds speedily. They have, however, warned that assistance would only be provided to businesses that remain compliant by filing and paying their obligations even during the lockdown. This means that the relief interventions will not apply to you if your business becomes non-compliant.
The following tax measures for businesses were pronounced:
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Employment Tax Incentive (ETI) subsidy and payment acceleration
Who does this apply to?
ETI was introduced in 2014 to encourage businesses to hire young people by reducing the cost of hiring them. Through the programme, businesses are allowed to pay reduced employee tax (PAYE) to SARS. Qualifying employees are employees that
- are between the ages of 18 and 29 years, and
- earn a remuneration that is less than R6 500
ETI claimable is limited to R1000 per month in the first year of employment and R500 in the second year of employment. ETI claims can only be done twice per year (i.e every six months).
How can I benefit?
- ETI claimable for the next four months will be increased by R500. This means first year claims will be R1500 and second year claims will be R1000.
- Employees who are between the ages of 30 and 65 years who are currently excluded from ETI programme because of age will be eligible for R500 claim benefit.
- Payment of ETI claims will be increased from twice per year to every month
This can be summarised below:
| Employee | Current ETI benefit | COVID-19 ETI benefit | Total |
| Employees who currently in ETI first year | R1 000 | R500 | R1 500 |
| Employees who currently in ETI second year | R500 | R500 | R1 000 |
| Employees where ETI claims have been exhausted | R0 | R500 | R500 |
| Employees between 30 years and 65 years who have never been eligible | R0 | R500 | R500 |
When can I access this?
The proposed amendments will apply for a period of four months and are deemed to have come into operation on 1 April 2020 and end on 31 July 2020.
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Employment Tax (PAYE) delayed payment
Who does this apply to?
The benefit will apply to compliant small to medium-sized businesses i.e businesses with turnover not exceeding R50 million.
How can I benefit?
For the next four months, (1 April 2020 to 31 July 2020) SARS will allow qualifying you to defer 20% on PAYE payable to SARS. No interest or penalties will be charged on the outstanding 20%. The deferred payments will be payable in equal instalments over six months from 1 August 2020 (due on 7 August 2020).
-
Provisional Tax payment deferral
Who does this apply to?
The benefit will apply to compliant small to medium-sized businesses i.e businesses with turnover not exceeding R50 million.
How can I benefit?
Provisional tax is payable by businesses every six months. Businesses are required to estimate their tax payable in the current year, 50% of the estimate is due in the first six months and the remainder is due at the end of the year of assessment.
With the relief, SARS will allow a deferral of a portion of the payment of the first and second provisional tax liability without them imposing administrative penalties and interest for the late payment of the deferred amount
Here’s how this will affect your provisional tax payments:
- You can pay 15% of your total estimated taxable income for the tax year for your first payment. This is due from 1 April 2020 to 30 September 2020.
- You can pay 65% of your tax payment for the second provisional tax payment. This is due between 1 April 2020 and 31 March 2021.
- To avoid interest, SMEs must pay the full tax liability, which comes to 35% in total, when they make their third provisional tax payment.
What about VAT?
Unfortunately there has been no relief outlined for late VAT payments which means that all VAT due to SARS must be paid by your deadline. Furthermore SARS will impose 10% late payment penalties and interes on any VAT payments made after their due dates.
It is likely that the COVID-19 would be classified as exceptional circumstances and further concessions would be made available in the future.
For more information on SARS relief measures, please visit SARS COVID-19 page here
We have also put together a list of other available COVID-19 available interventions that you can access here.
