Following the announcement by President Cyril Ramaphosa that government will be introducing tax measures to combat the effects of the COVID-19 pandemic on businesses, National Treasury has published the below COVID 19 tax measures for businesses.
It is important to note that the information below is correct as of 30 March 2020 but will be subject to change over the coming days as the legislation as refined and / or changed.
1. Employment Tax Incentive (ETI):
For the periods commencing 01/04/2020 to 31/07/2020 the following has been proposed:
- An increase in the maximum ETI amount claimable from R1,000 to R1,500 in the first qualifying 12 months.
- An increase in the maximum ETI amount claimable from R500 to R1,000 for the second qualifying 12 months.
- Allowing an ETI claim of R500 per month for employees in the following age groups:
- Employees aged between 18 and 29 who are no longer eligible for the ETI due to their employer having claimed ETI in respect of these employees for 24 months.
- Employees aged between 30 to 65 who are not eligible for the ETI due to their age.
- ETI reimbursements will be paid out by SARS monthly instead of bi-annually.
2. Deferred Pay As You Earn payments:
- For the period 01/04/2020 to 31/07/2020, tax compliant small to medium sized businesses with an annual turnover not exceeding R50 million may defer 20% of their PAYE liability with no penalties and interest imposed by SARS.
- The deferred amount must be paid to SARS in six equal instalments with the first instalment to be paid back to SARS on 07 September 2020.
3. Deferred corporate income tax payments:
Tax compliant small and medium sized businesses with annual turnover of less than R50 million that conduct a trade (the definition of “conducting a trade” is still to be finalised by SARS) may defer their corporate income tax payments as follows:
- The first provisional tax payment (which falls due from 01 April 2020 to 30 September 2020) may be based on 15% of the estimated tax liability.
- The second provisional tax payment (which falls due from 01 April 2020 to 31 March 2021) may be based on 65% of the estimated tax liability.
- Any amounts deferred must be paid in full when settling the third provisional tax payment to avoid interest charges.
- An announcement will be made in due course by National Treasury with regards to the eligibility criteria for individuals who are provisional taxpayers.
Should you need any assistance with any of above please contact any of our Partners or our Tax specialists.