covid-19 tax benefit and relief measures€¦ · •this provides relief of around r6 billion....
TRANSCRIPT
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
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.
TAX MEASURES
* 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.
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.
TAX MEASURES
* 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 .
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.
TAX MEASURES
4. ADDITIONAL TAX RELIEF / DEFERRAL MEASURES
• From 1 May 2020, there will be a four-month holiday for contributions (1% of total salaries).
• This provides relief of around R6 billion.
Skills Development Levy
• A three-month deferral for filing and first payment of Carbon Tax – now 31 October 2020.
• This provides relief of close to R2 billion. Carbon tax
• Taxpayers can claim an additional 10% as tax deduction on donations to the fund (now 20%).
• PAYE can be adjusted for donations made through the employer to the fund – up to 33.3%.
Contributions to Solidarity fund
• SARS to fast track VAT refunds. • Customs duty and VAT concessions on
importation of “essential goods”. A list of qualifying goods is available on the ITAC website
VAT
• Budget 2020 Measures to broaden the corporate income tax base will be postponed to at least 1 January 2022 (as opposed to 1 January 2021 as announced).
Budget 2020 Measures
• Businesses incapable of making payment due to the COVID-19, may apply directly to SARS to defer tax payments without incurring penalties.
SARS Penalties
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/
NATIONAL DISASTER BENEFITS
ASSISTANCE PROVIDED
Category Monthly Weekly Daily
Maximum R6 730.00 R1533.00 R310.60
Minimum R3500.00 R830.40 R166.08
Domestic Workers R622.70 R124.56
Agriculture R747.20 R149.44
Expanded public works R456.80 R91.36
Reduced work time (RWT) •UI19 •UI2.7 (employer) •UI2.1 •UI2.8 (bank) •Copy of identification •Termination Code “17” •Letter from employer reduced work time due to
Covid-19
• Send email: [email protected] to receive the draft templates.
• Claims submitted: https://uifecc.labour.gov.za/covid19/
CLAIM APPLICATION
REQUIREMENTS
Temporary Employer Relief Scheme (TERS) •Must be registered with UIF •Letter of authority •Memorandum of agreement •Prescribed template that will require
information from the employer •Certified confirmation of bank account •Payroll for the last 3 months •Completed application procedure •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
[email protected] 083 655 8217
2. COMPENSATION FUND (UIF ACT SECTION 20)
Compensation for occupationally acquired – COVID-19
NATIONAL DISASTER BENEFITS
ASSISTANCE PROVIDED
• Total temporary disablement • Suspected cases – self quarantine (employer
responsible) • Confirmed cases – if Fund accepts liability, will pay for
30 days • Medical aid • Death benefit
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
• Compensation Fund [email protected]
• Rand Mutual Assurance [email protected]
• Federated Employers Mutual [email protected]
CLAIM APPLICATION
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 *
* The Department of Social Development still needs to issue the requirements needed to apply for these grants.
PROCESS AND REQUIREMENTS
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: [email protected]
• For corporates and for foundations:
• Email: [email protected] • Email: [email protected] • Phone: 0860 001 001
COVID-19 RELIEF FUNDING
2. SA FUTURE TRUST (SAFT)
Administered by Oppenheimer Generations Total fund: R1 billion
• Qualifying small businesses (SMMEs) • <R25m turnover •In good standing as at 29 Feb 2020
•Trading for min 2 years
•Impacted by Covid-19
Who
• An interest-free, 5-year loan to the business entity •Exclusively for the purpose of paying permanent employees
•Repayable at the end of the term
•NB:
•Proceeds of the loans will be paid directly into the accounts of the participating employees
•Employees are not liable for repayment of this loan
•Funding available:
•R750 weekly wage per employee for 15 weeks = R11 250 per employee
•No limit to the number of employees per business
Relief
• SMMEs should register their interest directly with their bank.
•https://oppgen.com/saft/#requireddocumentation Application
3. SUKUMA RELIEF PROGRAMME
Administered by Business Partners (Rupert Foundation & Remgro) Funding available: R1 billion
COVID-19 RELIEF FUNDING
• For working capital (Salaries, rent, HPs, Loan instalments) Who
• Transaction Value – Loans between R250 000 –R1 000 000 •Cost of finance:
•M1 –M12 0%, payment holiday for first 12 months, no early payment implications
•M12 -M60 Prime interest, no early payment implications
Relief
• Qualifying Criteria:
•2019 AFS signed (non negotiable)
•Fully compliant entity
•Formal registered entity
•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/
Application
* 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 BANK
5. DEBT RELIEF FINANCE SCHEME
Administered by Department of Small Business Total fund: R200 million.
COVID-19 RELIEF FUNDING
• Existing businesses negatively impacted by Covid-19 •Requirements:
•CIPC-registered companies
•100%-owned by SA citizens
•70% of employees are SA citizens
•Registered with SARS; tax-compliant
•UIF compliant
Who
• Loan funding @ Prime-5%: •Working capital: Stock, bridging finance
•Purchase order finance
•Capital requirement finance
Relief
• Register your business on the small-business database: www.smmesa.gov.za
•Complete an application form and upload supporting docs.
•For assistance with micro-enterprises: [email protected]
Application
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
•100%-owned by SA citizens
•70% of employees are SA citizens
•Tax-compliant
•UIF compliant
Who
• Loan funding @ Prime-5%: •Working capital: Stock, bridging finance
•Purchase order finance
•Capital requirement finance
Relief
• Register your business on the small-business database: www.smmesa.gov.za
• Complete an application form and upload supporting docs.
•For assistance with micro-enterprises: [email protected]
Application
COVID-19 RELIEF FUNDING
• Owner managed shop owners Who
• R10 000 (with a possible R5 000 being made available as a second phase) for purchasing a basket of essential goods at a discounted price for a period of three months from participating wholesalers.
Relief
• Not yet available Application
7. SELF EMPLOYED, HAWKERS, SPAZA SHOPS
Administered by Department of Small Business Development in collaboration with SEFA .Total fund: R30 million
• Tourism and hospitality industry •CIPC – registered and in existence >1 year with turnover ≤R2.5m per annum, tax clearance, UIF –registered and proof of min wage compliance.
Who
• Funding available to assist SMEs in the Tourism and hospitality sector, who are under particular stress due to the new travel restrictions.
Relief
• Contact Ms Hlengiwe Nhlabathi: [email protected] Application
8. TOURISM RELIEF FUNDING
Administered by Department of Tourism. Total fund: R200 million
COVID-19 RELIEF FUNDING
• Essential supplies: •Companies with manufacturing track record
•Experience to import at scale
•Accredited supplier with contract or purchase order or corporate guarantee
Who
• Short-term loan • Revolving credit facility
• Guarantees to banks for banking facilities, imports, ordering requirements
• IDC loan and trade finance facilities: P + 1% pa
• Guarantees: 2% pa
Relief
• Submit documents to [email protected]
• Contact Mr Claassen: 011 269 3482 or Mr Rishel: 011 269 3261
• For more info: https://citypress.news24.com/Business/essential-business-support-20200401
Application
9. IDC COVID-19 ESSENTIAL SUPPLIES INTERVENTION
Administered by Industrial Development Corporation .Total fund: R500 million
• Companies that manufacture and provide essential supplies and have been existence > 1year
• Valid contract/purchase order or letter of intent
• Companies with BBBEE Level 4 will be encouraged
Who
• 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
• 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
Relief
• Submit enquiries to: [email protected] Application
10. MCEP COVID-19 PROGRAMME
Administered by the Industrial Development Corporation. Total fund: R300 million
COVID-19 RELIEF FUNDING
• Businesses registered with UIF Who
• R200 million has been set aside under the COVID-19 Black Business Fund as a blended facility for SMEs that manufacture and supply Identified Priority Products (including food) to access concessionary loan funding.
•Funding of R500 000 – R10 million
Relief
• 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)
• 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 necessary
Application
11. NATIONAL EMPOWERMENT FUND
COVID-19 Black Business Funding Solution. Funding available: R200 million
KEY 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
[email protected] https://www.bassgordon.co.za/team/