COVID-19 TAX BENEFIT AND RELIEF MEASURES - APRIL / MAY 2020 - MGI Bass Gordon
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COVID-19 TAX BENEFIT AND
RELIEF MEASURES
APRIL / MAY 2020
CONTENT Tax Relief Measures • Employees Tax Incentive (ETI) • Employees’ tax payment deferral (PAYE) • Provisional tax payment deferral • Additional tax relief National Disaster Benefits • Temporary Employer Relief Scheme (TERS) • Compensation fund Covid-19 Relief Funding • Solidarity Fund • South African Future Trust (SAFT) • Sukuma Relief Programme • Assistance from Banks • Debt Relief Finance Scheme • Business Growth Resilience Facility • Self Employed, Hawkers, Spaza Shops • Tourism Relief Funding • IDV Covid-19 Essential Supplies Intervention • Mcep Covid-19 Programme • National Empowerment Fund Key Resources
TAX MEASURES
On 29 March 2020, the Minister of Finance announced the details of an initial set of measures to assist tax
compliant businesses with cash flow assistance and provide an incentive for businesses to retain their lower-
income employees.
National Treasury recognises that the short-term interventions announced in the first fiscal package do not go
far enough in assisting businesses or households through the crisis – especially as the lockdown has since been
extended.
In line with the President’s address to the nation on 21 April 2020, the Minister of Finance provides more detail
on the second set of measures that aim to assist individuals and businesses through the pandemic.
The measures are expected to provide around R70 billion in support, either through reductions in taxes
otherwise payable or through deferrals of tax payments for tax compliant businesses.
The interventions (updated 23 April 2020) include:
1. EMPLOYMENT TAX INCENTIVE (‘ETI’) RELIEF (1 APRIL - 31 JULY 2020)
• Increasing the maximum ETI currently claimable during the above 4 month period for those private
sector employees earning below R6500 from R1 000 to R1 500 for the 1st qualifying 12 months and from
R500 to R1 000 in the 2nd qualifying 12 months.
• Allowing a monthly ETI claim of *R750 for employees aged:
• 18 to 29 years, who are no longer eligible for the ETI because the employer has previously claimed
ETI in respect of these employees for 24 months;
• 30 to 65 years, who would ordinarily not be eligible for the ETI because of their age.
• Accelerating the payment of ETI reimbursements from twice a year to monthly.
The above relief will only apply to employers that were registered with SARS at 1 March 2020 and to employers
that are not in default in relation to any outstanding returns or outstanding tax debt.
* The first set of tax measures provided for a wage
subsidy of up to R500 per month for each employee
that earns less than R6 500 per month. The
increased amount of R750 per month will amount
to a total cost of around R15 billion.
TAX MEASURES
2. DEFERRAL OF PORTION OF PAYE LIABILITY (1 APRIL - 31 JULY 2020). THIS RELIEF IS APPLICABLE TO
SMALL AND MEDIUM-SIZED BUSINESSES ONLY
• Deferral of payment of *35% of the Pay-As-You-Earn (“PAYE”) liability, without SARS imposing interest or
penalties for late payment.
• The deferred liability will become payable in equal instalments over the six-month period commencing on
1 August 2020, with the first payment due on 7 September 2020.
The concept of small and medium-sized business is embodied in the definition of a ‘qualifying taxpayer’. This
is defined as a company, trust, partnership or individual with a gross income not exceeding *R100 million
during its year of assessment ending on or after 1 April 2020 but before 1 April 2021. A further requirement is
that the gross income must not include more than 10 per cent income (sic) derived from interest, dividends,
foreign dividends, rental from letting fixed property and any remuneration received from an employer.
A further requirement is that the taxpayer must be tax compliant in terms of section 256(3) of the Tax
Administration Act. For this purpose, the tax compliance status is to be determined at the time the taxpayer
seeks to rely on the deferral.
3. DEFERRAL OF PORTION OF PROVISIONAL TAX LIABILITY (1 APRIL 2020 - 31 MARCH 2021). THIS RELIEF
IS APPLICABLE TO SMALL AND MEDIUM-SIZED TAXPAYERS ONLY
Deferral of a portion of the payment of the first and second provisional tax liability without incurring any
penalties or interest as follows:
• The first provisional tax payment (due from 1 April 2020 to 30 September 2020) will be based on 15%
of the estimated total tax liability.
• The second provisional tax payment (due from 1 April 2020 to 31 March 2021) will be based on 65% of
the estimated total tax liability.
• To avoid interest charges, provisional taxpayers with deferred payments will need to pay the full tax
liability when making their third “top up” provisional tax payment.
* The first set of tax measures allowed tax compliant
businesses to defer 20% of their employees’ tax liabilities
over the next four months (ending 31 July 2020) and a
portion of their provisional corporate income tax payments
(without penalties or interest). The gross income threshold
for both deferrals will be increased from R50 million to R100
million, providing total cash flow relief of around R31 billion
with an expected revenue loss of R5 billion .TAX MEASURES
4. ADDITIONAL TAX RELIEF / DEFERRAL MEASURES
• From 1 May 2020, there will be a four-month
Skills Development
holiday for contributions (1% of total salaries).
Levy • This provides relief of around R6 billion.
• A three-month deferral for filing and first
Carbon tax payment of Carbon Tax – now 31 October 2020.
• This provides relief of close to R2 billion.
• Taxpayers can claim an additional 10% as tax
Contributions to deduction on donations to the fund (now 20%).
Solidarity fund • PAYE can be adjusted for donations made
through the employer to the fund – up to 33.3%.
• SARS to fast track VAT refunds.
• Customs duty and VAT concessions on
VAT importation of “essential goods”. A list of
qualifying goods is available on the ITAC website
• Budget 2020 Measures to broaden the corporate
Budget 2020 income tax base will be postponed to at least 1
Measures January 2022 (as opposed to 1 January 2021 as
announced).
• Businesses incapable of making payment due to
SARS Penalties the COVID-19, may apply directly to SARS to
defer tax payments without incurring penalties.NATIONAL DISASTER BENEFITS
1. COVID-19 TEMPORARY EMPLOYEE/EMPLOYEE RELIEF SCHEME
The Department of Employment and Labour has approved a temporary employer/employee relief scheme
(TERS). This enables employers to pay employees with funds made available by the UIF as a TERS allowance.
Certain conditions must be met for the UIF to pay the amount to the employer.
The maximum TERS allowance payable for each employee, is R17,242 per month.
Department of Labour: http://www.labour.gov.za/
ASSISTANCE PROVIDED CLAIM APPLICATION
Category Monthly Weekly Daily • Send email:
Covid19ters@labour.gov.za
Maximum R6 730.00 R1533.00 R310.60 to receive the draft templates.
Minimum R3500.00 R830.40 R166.08
• Claims submitted:
Domestic Workers R622.70 R124.56 https://uifecc.labour.gov.za/covid19/
Agriculture R747.20 R149.44
Expanded public works R456.80 R91.36
REQUIREMENTS
Temporary Employer Relief Scheme (TERS) Reduced work time (RWT)
•Must be registered with UIF •UI19
•Letter of authority •UI2.7 (employer)
•Memorandum of agreement •UI2.1
•Prescribed template that will require •UI2.8 (bank)
information from the employer •Copy of identification
•Certified confirmation of bank account •Termination Code “17”
•Payroll for the last 3 months •Letter from employer reduced work time due to
•Completed application procedure Covid-19
•Letter of undertaking
If you need assistance with your application or require
guidance , please reach out to us:
Lizaan van der Vyver
Tax and Legal Compliance Officer
lizaan.vandervyver@bassgordon.co.za
083 655 8217NATIONAL DISASTER BENEFITS
2. COMPENSATION FUND (UIF ACT SECTION 20)
Compensation for occupationally acquired – COVID-19
ASSISTANCE PROVIDED CLAIM APPLICATION
• Total temporary disablement • Compensation Fund
• Suspected cases – self quarantine (employer covid19claims@labour.gov.za
responsible)
• Rand Mutual Assurance
• Confirmed cases – if Fund accepts liability, will pay for
contactcentre@randmutual.co.za
30 days
• Medical aid • Federated Employers Mutual
• Death benefit FEM-Registry@fema.co.za
REQUIREMENTS AND FORMS
• Employers report – W.CL.1
• Notice of occupational disease and claim for compensation – W.CL.14
• Exposure and medical questionnaire
• First medical report – W.CL.22 indicating U07.1 as code
• Exposure history – W.CL 110
• Medical report
• Progress medical report – W.CL.26
• Final medical report – W.CL.26
• Affidavit
3. SOCIAL DEVELOPMENT
Temporary 6 month Covid-19 Grant – R50 billion
ASSISTANCE PROVIDED
• An additional R300 per month for child support grant beneficiaries in May 2020.
• An additional R500 per month for child support grant beneficiaries from June 2020 to October 2020.
• An additional R250 per month for all other grant beneficiaries for the next 6 months.
• A Covid-19 Social Relief of Distress grant amounting to R350 per month for the next 6 months will be
paid to individuals who are currently unemployed and DO NOT receive any other form of social grant of
UIF payment *
PROCESS AND REQUIREMENTS
* The Department of Social Development still needs to issue the requirements needed to apply for these
grants.COVID-19 RELIEF FUNDING
1. SOLIDARITY FUND
The Solidarity Fund, established by President Ramaphosa will be a rapid response vehicle
through which individuals and organisations will be able to support South Africa’s
mobilisation against COVID-19 through secure, tax-deductible donations.
• Website: www.solidarityfund.co.za
• For any general information on the Solidarity Fund: info@solidarityfund.co.za
• For corporates and for foundations:
• Email: corporate@solidarityfund.co.za
• Email: foundation@solidarityfund.co.za
• Phone: 0860 001 001
2. SA FUTURE TRUST (SAFT)
Administered by Oppenheimer Generations Total fund: R1 billion
• Qualifying small businesses (SMMEs)
•COVID-19 RELIEF FUNDING
3. SUKUMA RELIEF PROGRAMME
Administered by Business Partners (Rupert Foundation & Remgro) Funding available: R1 billion
Who • For working capital (Salaries, rent, HPs, Loan instalments)
• Transaction Value – Loans between R250 000 –R1 000 000
•Cost of finance:
Relief •M1 –M12 0%, payment holiday for first 12 months, no early
payment implications
•M12 -M60 Prime interest, no early payment implications
• Qualifying Criteria:
•2019 AFS signed (non negotiable)
•Fully compliant entity
•Formal registered entity
Application •Ownership does not have to be SA Citizens Excludes: Direct
agriculture, non-profit organisations, Underground mining, On
lending
•https://finance.businesspartners.co.za/welcome-to-the-
sukuma-relief-programme/
* Based on available information, the funds have been over subscribed.
4. ASSISTANCE FROM BANKS
A Loan Guarantee Scheme in partnership with the major banks, National Treasury and the South African Reserve
Bank.
• Total funding available: R200 billion
The Banks will be assisting with solutions based on their client’s unique requirements and operations:
ABSA
FNB
NEDBANK
STANDARD BANKCOVID-19 RELIEF FUNDING
5. DEBT RELIEF FINANCE SCHEME
Administered by Department of Small Business Total fund: R200 million.
• Existing businesses negatively impacted by Covid-19
•Requirements:
•CIPC-registered companies
Who •100%-owned by SA citizens
•70% of employees are SA citizens
•Registered with SARS; tax-compliant
•UIF compliant
• Loan funding @ Prime-5%:
•Working capital: Stock, bridging finance
Relief •Purchase order finance
•Capital requirement finance
• Register your business on the small-business database:
www.smmesa.gov.za
Application •Complete an application form and upload supporting docs.
•For assistance with micro-enterprises:
debtrelief@seda.org.za
6. BUSINESS GROWTH RESILIENCE FACILITY
Administered by Department of Small Business . Total fund: R300 million.
• SMMEs providing essential services or products
•Requirements:
•CIPC-registered companies
Who •100%-owned by SA citizens
•70% of employees are SA citizens
•Tax-compliant
•UIF compliant
• Loan funding @ Prime-5%:
•Working capital: Stock, bridging finance
Relief •Purchase order finance
•Capital requirement finance
• Register your business on the small-business database:
www.smmesa.gov.za
Application • Complete an application form and upload supporting docs.
•For assistance with micro-enterprises:
growthfund@seda.org.zaforCOVID-19 RELIEF FUNDING
7. SELF EMPLOYED, HAWKERS, SPAZA SHOPS
Administered by Department of Small Business Development in collaboration with SEFA .Total fund: R30 million
Who • Owner managed shop owners
• R10 000 (with a possible R5 000 being made available as a
second phase) for purchasing a basket of essential goods at a
Relief discounted price for a period of three months from
participating wholesalers.
Application • Not yet available
8. TOURISM RELIEF FUNDING
Administered by Department of Tourism. Total fund: R200 million
• Tourism and hospitality industry
•CIPC – registered and in existence >1 year with turnover ≤R2.5m
Who per annum, tax clearance, UIF –registered and proof of min
wage compliance.
• Funding available to assist SMEs in the Tourism and hospitality
Relief sector, who are under particular stress due to the new travel
restrictions.
• Contact Ms Hlengiwe Nhlabathi:
Application hnhlabathi@tourism.gov.zaCOVID-19 RELIEF FUNDING
9. IDC COVID-19 ESSENTIAL SUPPLIES INTERVENTION
Administered by Industrial Development Corporation .Total fund: R500 million
• Essential supplies:
•Companies with manufacturing track record
Who •Experience to import at scale
•Accredited supplier with contract or purchase order or
corporate guarantee
• Short-term loan
• Revolving credit facility
• Guarantees to banks for banking facilities, imports, ordering
Relief requirements
• IDC loan and trade finance facilities: P + 1% pa
• Guarantees: 2% pa
• Submit documents to callcentre@idc.co.za
• Contact Mr Claassen: 011 269 3482 or Mr Rishel: 011 269 3261
Application • For more info:
https://citypress.news24.com/Business/essential-business-
support-20200401
10. MCEP COVID-19 PROGRAMME
Administered by the Industrial Development Corporation. Total fund: R300 million
• Companies that manufacture and provide essential supplies
and have been existence > 1year
Who • Valid contract/purchase order or letter of intent
• Companies with BBBEE Level 4 will be encouraged
• MCEP funding can be standalone or blended with IDC
• Limited to R30 million per applicant in total
• Priced at a fixed rate of 2.5% per annum
Relief • Maximum term is 48 months, including moratorium
• 1st drawdown must occur within 1 month from approval date
• Raising and commitment fees are excluded
• All other standard fees are applicable
Application • Submit enquiries to: callcentre@idc.co.zaCOVID-19 RELIEF FUNDING
11. NATIONAL EMPOWERMENT FUND
COVID-19 Black Business Funding Solution. Funding available: R200 million
Who • Businesses registered with UIF
• R200 million has been set aside under the COVID-19 Black
Business Fund as a blended facility for SMEs that manufacture
Relief and supply Identified Priority Products (including food) to
access concessionary loan funding.
•Funding of R500 000 – R10 million
• Required documents:
• Declaration on BEE status and size of business
• NEF application form (accessible on NEF website:
www.nefcorp.co.za)
• Summary of production in the last 3 months
• Copy of the financial statements (up to 3 years)
Application • Signed copy of the contract or purchase order from the
applicant’s clients
• Financial forecast for the duration of the contract, order, or
letter of intent
• Additional information that would be necessary to enhance
the application may be requested by the NEF as andwhen
deemed necessaryKEY RESOURCES COVID-19 USEFUL INFORMATION • For useful and available information on our website: click here OFFICIAL GOVERNMENT REGULATIONS AND GUIDELINES ON COVID-19 • All official government regulations and guidelines are: click here USEFUL LINKS • SA Government info page: click here • SARS COVID-19 Impact info page: click here CONTACT US info@bassgordon.co.za https://www.bassgordon.co.za/team/
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