South Africa

Welcome to the high-level summary of Covid-19 related actions by the South African Government. The details and links below have been split between “Tax Filings Affected”, “Government Employee Wages Benefits Programs” and “Government Loan and Support Programs”; and are simply extracts from the more detailed information available on the websites of the South African Praxity Participant firms’ websites, links to which are available at the bottom of this page. Praxity Participant Firm in South Africa is Mazars.

Tax Filing Affected

Tax Subsidy A tax subsidy of up to R750 per month for the next four months (i.e., April to July 2020) for employees earning below R6 500 per month. This proposal is in two parts. In respect of employees that already qualify for the Employees Tax Incentive (ETI), the cap on the amount of ETI claimable is increased as follows:

  • First qualifying 12 months from R1 000 to R1 500; and
  • Second qualifying 12 months from R500 to R1 000. The second part is in respect of employees who do not currently qualify for the ETI either because:
  • They are in the 18 to 29 age bracket, but the employer has already claimed the ETI for the maximum 24 month period; or
  • They do not qualify, as they are in the 30 to 65 age bracket. Accelerating payment of ETI reimbursements The SARS will be changing its system to accelerate any reimbursements due to an employer under the ETI scheme from the current twice a year to a monthly basis.

This will apply in those situations where the ETI incentive exceeds the amount of PAYE that an employer must pay over to the SARS. Deferral of Payments Businesses with a turnover of less than R50 million that are currently tax compliant can delay payment of 20% of their employees tax (PAYE) liabilities (for April to July 2020) and a portion of their provisional tax payments without interest and penalties. PAYE

  • An employer with turnover of less than R50 million may defer payment of 20% of its PAYE liability for each of the months from April to July 2020. These deferred amounts must then be paid in six equal instalments from August 2020 through January 2021. Thus, the first of these payments must be made (along with the August PAYE) on 7 September 2020. Note that under the wording of the Explanatory Note there is no reduction in the PAYE payable for March 2020. The payment on 7 April will therefore be the full amount of the employer’s March PAYE liability.
  • 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.
  • The 20% deferral of payment will not be subject to any penalties or interest, provided that the employer does not underestimate its PAYE liability in that period. Provisional Taxes
  • An employer with turnover of less than R50 million may defer payment of 20% of its PAYE liability for each of the months from April to July 2020. These deferred amounts must then be paid in six equal instalments from August 2020 through January 2021. Thus, the first of these payments must be made (along with the August PAYE) on 7 September 2020. Note that under the wording of the Explanatory Note there is no reduction in the PAYE payable for March 2020. The payment on 7 April will therefore be the full amount of the employer’s March PAYE liability.
  • 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.
  • The 20% deferral of payment will not be subject to any penalties or interest, provided that the employer does not underestimate its PAYE liability in that period.
  • An eligible taxpayer can base its first and second provisional tax payments on the following reduced amounts: First provisional payment due between 1 April 2020 and 30 September 2020 – 15% of estimated total tax liability; Second provisional payment due between 1 April 2020 and 31 March 2021 – 65% of estimated total tax liability.

Government Employee Wages Benefits Programs

COVID-19 Temporary Employee/Employer Relief Scheme (C19 TERS)

  • An employer will qualify for C19 TERS relief if they, as a direct result of COVID-19, ceased their operations for a three-month or lessor period, and suffer financial distress as a direct result thereof. (our emphasis)
  • The benefit shall be de-linked from the UIF normal benefits and therefore the normal rule that for every four days worked, the employee accumulates a one-day credit and the maximum credit days payable is 365 for every four years will not apply.
  • The benefits will only pay for a portion of the cost of the employees salary during the temporary closure of the business operations
  • The salary benefit will be capped to a maximum of R17,712.00 per month, per employee and an employee will be paid in terms of the income replacement rate sliding scale, (38% - 60%) as provided for by the Unemployment Insurance Act No 63 of 2001, (UI Act).
  • Should an employee’s income determined in terms of the income replacement sliding scale fall below the minimum wage of the sector concerned, the employee will be paid a replacement income equal to a minimum wage of the sector concerned.
  • Where the business is not closed but an employee is in quarantine for 14 (fourteen) days due to COVID-19, the employee shall qualify for the illness benefit. • Confirmation from both the employer and the employee must be submitted together with the application as proof that the employee was in an agreed pre-cautionary self-quarantine for fourteen days.
  • Should and employee be quarantined for more than fourteen days, a medical certificate from a medical practitioner must be submitted together with the continuation form for payment.
  • Qualifying employers must report their closure to the following email address: covid19ters@labour.gov.za
  • On emailing the abovementioned email address, the employer (now called the applicant) will receive an automatic response outlining the application procedure.
  • The applicant must then send the required documentation to the following email address: covid19UIFclaims@labour. gov.za where the following documents will be required: Letter of authority from the company, A signed Memorandum of Agreement, (MOA), between the employer or the Bargaining Council with the UIF, Evidence/payroll as proof of the last three months’ employee salaries, and Confirmation of the bank account, in the form of a certified latest bank statement.
  • The C19 TERS will remain in operation for a three month period or until it is withdrawn by the Minister, whichever comes first.

Employees’ Tax Incentive

  • The expanded ETI of R500 per employee earning less than R6 500 per month is to be increased by 50% to R750 per qualifying employee. This incentive is available to every tax compliant employer that was registered as such on 1 March 2020 in respect of each employee aged between 18 and 65 that earns less than R6 500 per month.
  • Further, the SARS has updated its Business Requirements Specification (BRS) for the PAYE Employer Reconciliation to take this expanded ETI into account. The new BRS can be found here

Skills Development Levy Holiday

  • In the media release National Treasury indicates that it will be providing a four-month holiday for the payment of Skills Development Levy contributions. Thus, an employer would receive an additional 1% benefit on its payroll.
  • The proposal is that this be implemented for four months from 1 May 2020 until 31 August 2020. Given the timing of this suggestion and the implementation dates, one would assume that this would be applicable in respect of the May through August payrolls, and payable by the seventh of the following month.

Government Loan and Support Programs

SARS Payment Deferrals Certain eligible taxpayers that are incapable of making tax payments due to the COVID-19 pandemic may apply to SARS to defer certain tax payments without incurring penalties.

  • The applicant will be permitted to pay off their tax liability over several installments, granting the applicant immediate cashflow relief;
  • The applicants’ tax compliance status with SARS will remain in good standing, enabling the applicant to benefit from other tax relief measures offered by SARS (which often require the applicant to be in good standing with SARS);
  • If SARS approves an IPA before the relevant payment is due, SARS will not levy a late payment penalty; and
  • If SARS approves an IPA request after the payment is due, SARS will consider the remittance of a late payment penalty on a case by case basis.
  • Larger businesses (with gross income of more than R100 million must email SARS using the following email address: COVID19IPAaboveR100m@sars.gov.za .
  • Businesses with gross income of less than R100 million must email SARS using the following email address: COVID19IPAbelowR100m@sars.gov.za .
  • Email application should include A letter addressed to SARS requesting a deferred payment arrangement, stating detailed reasons for the request and the specific tax type and tax periods involved; The applicants’ latest annual financial statements and latest management accounts; A list of the applicants’ debtors and creditors; and a cash flow projection for the next three months. SMMME Debt Relief Finance Scheme
  • The business must have been registered with CIPC by at least 28 February 2020
  • The company must be 100% owned by South African Citizens
  • Employees must be 70% South Africans
  • Must be registered and compliant with SARS and UIF
  • Must have proof that the business is negatively affect by COVID-19
  • Registration on the National SMME Database – https://smmesa.gov.za

Sukuma Relief Program

  • The fund is made up of two distinct relief offerings namely those for sole proprietors and another for business entities (close corporations, companies, and trusts.)
  • Managing Director for Business Partners, Mr. Ben Bierman, made it clear in the financier's press release that financial aid and assistance will comprise grants and low-interest bearing loads with an applicable 12-month repayment holiday. In addition, qualifying formal sole proprietors will receive a non-payable grant of R25 000.

Applications for the COVID-19 relief fund are now open at www.businesspartners.co.za

Tourism Relief Fund for SMMES

  • The Tourism Relief Fund provides once-off capped grant assistance to Small Micro and Medium Sized Enterprises (SMMEs) in the tourism value chain to ensure their sustainability during and post the implementation of government measures to curb the spread of Covid-19 in South Africa.
  • Capped at R 50 000 per entity, grant funding can be utilized to subsidize expenses towards fixed costs, operational costs, supplies and other pressure costs items.

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The information contained herein on Covid-19 government measures within the G8, consists solely of information that can be found on the websites of one or more Praxity Participant firms, and has not been written, modified or verified by Praxity, it’s staff, officers or directors.