Covid-19 SARS Relief

SARS

Having already given back R2.4 billion in tax refunds to large and SME businesses over the four days since the lockdown begun, SARS is paying out tax refunds early to alleviate the COVID-19 pandemic. SARS can only assist you if you remain compliant by fulfilling your filing and payment obligations even during the lockdown.

It is very important that even if you are in distress that you continue to be compliant in order to access the tax relief measures that government has put in place to counter the economic effects of the Covid-19 pandemic. You are to use the available SARS channels to make payments that are due on or before 31 March. SARS has made available the following online channels, namely, MobiApp, eFiling, e@syFile, email and the SARS Contact Centre (0800 00 7277).

Using the tax system, SARS has put in place the following relief measures to help businesses from 1 April:

  • an additional tax subsidy of up to R500 per month per qualifying employee for the next four months for those private sector/non-government employees earning below R6,500 under the Employment Tax Incentive

What does this mean? 

    • currently, for every employee of yours who earns less than R6 500 per month and is younger than 30 years, you can claim back R1 000 a month in the first year of their employment and R500 in the second year of their employment from SARS, with the additional subsidy of R500 per qualifying employee, you will be able to claim R1 500 in the first year and R1 000 in the second year for employees younger than 30 
    • R500 will also be made available to you for any of your employees aged between 18 and 65, who have been employed by you for 24 months or more, and receive remuneration equal to R6 500 per month or less
    • these subsidises are claimed back from the amount of employees’ tax (PAYE) you pay to SARS, who reimburses these amounts twice a year 
    • in addition to these additional payments, instead of every 6 months, SARS will work towards paying out employment tax incentive reimbursements every month – how many months this will take is unknown 
  • tax compliant businesses making less than R50 million will be allowed to delay without penalties or interest:
    • 20% of your pay-as-you-earn (PAYE) liabilities over the next 4 months from the 1 April 2020
      • the 20% deferral will be payable by you in equal instalments over six months from August this year – this means the first payment instalment must be made by you on 7 September 2020
    • your first and second provisional corporate income tax payments
      • only 15% of your estimated tax liability for the year of assessment is payable for the first provisional tax payment – instead of the usual 50%.
      • with the second provisional payment, 50% should be paid with the remainder of the estimated tax liability to be paid by the third top-up date to avoid interest
      • what does this mean?
        • currently should you be a provisional taxpayer, you must make two tax payments a year.
        • the first is 50% of what you estimate the total liability will be for the year, and it is paid within the first six months of the tax year
        • the second comes at the end of the tax year, and is the actual tax amount for the year, minus the first payment. Penalties for late payment, or under payment, are levied, together with interest
        • now, you will only have to pay 15% of the estimated total tax liability for the first provisional tax payment, the second provisional tax payment will be based on 65% of the estimated total tax liability. The outstanding amount must be paid 30 September 2021 (or six months after your financial year-end), to avoid interest charges.
    • it should be noted that no relief measures outlined in terms of late payments of Value Added Tax (VAT) has been announced
      • this means as a VAT vendor, you should only delay your VAT payments as a last resort to avoid the automatic 10% late payment penalty when payments are made after their due dates

Treasury says that relief measures available to tax compliant SMEs, as detailed above, will probably be applicable to sole proprietors making less than R5 million per year and don’t earn more than 10% your turnover from interest, dividends, foreign dividends, rentals from letting fixed property and pay received from an employer.

Together with other key parties, SARS is exploring the temporary reduction of employer and employee contributions to the Unemployment Insurance Fund and employer contributions to the Skill Development Fund.

CURRENT STATUS: active as of April 1 2020 – find out more here

Website: https://www.sars.gov.za/Legal/Secondary-Legislation/Pages/COVID-19-Notices.aspx

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