In April 2020 President Cyril Ramaphosa announced tax relief measures to counter the adverse impact of Covid-19. These are vitally important measures affecting most working South Africans and their employers. Comments on the draft bills close on Friday 17th July 2020.
Sabia Academy webinars
SA Institute of Business Accountants (Sabia) is hosting a series of webinars on this vitally important topic to ensure accountants are fully up to speed on the latest legal changes. You can find out more here.
By the end of this webinar the participant should:
- Have an understanding of the practical issues surrounding the tax relief measures
- Better understand the government grants and aids
- Understand how both the employer and employee are affected
- The effect on consumer markets
- The effect on large corporates
- Understanding the economic impact of the pandemic
- Have an understanding of the TERS online application process.
Legal changes in a nutshell
In terms of the legal amendment just published, to qualify for tax relief measures you must be:
- A company, trust, partnership or individual (only taxpayers involved in trading activities are covered)
- Already tax compliant
- Gross income of less than R100 million
- Passive income does not make up more than 20% of the total
Here are the key points of the proposed changes:
Employees: 35% of employees’ tax may be deferred for the period 1 April 2020 to 31 July 2020.
Provisional taxpayers: For provisional taxpayers, the Draft Disaster Management Tax Relief Administration Bill, 2020 provides:
▪ For first provisional tax payments, due between 1 April 2020 and ending on 30 September, to be reduced to 15% (normally 50%) of estimated total tax liability without incurring any penalties and or interest as a result of the reduced payment,
▪ For second provisional tax payments, due between 1 April 2020 and 31 March 2021, to be based on 65% of estimated total tax liability. No interest or penalties will be levied as a result of the reduced payment, and
▪ The balance (being 35%) would need to be paid in full when making the third provisional tax payment i.e. the top up payment made within 6 months after year end failing which interest will be charged.
Skills Development Levy (SDL) holiday
All employers are exempt from the liability for and the payment of SDL for the period 1 May 2020 to 31 August 2020.
Donations to Covid-19 Disaster Relief Organisation and the Solidarity Fund
The Draft Disaster Management Tax Relief Bill, 2020 provides for a deduction in respect of any donations in cash or of property made in kind that was actually paid or transferred during the year of assessment to any COVID-19 Disaster Relief Organisation. The amount that can be claimed as a tax deduction is in accordance with the provisions of section 18A of the Income Tax Act which generally limits the amount that can be claimed as a tax deduction to 10% of taxable income.
Taxpayers making donations to the Solidarity Fund may be able to claim a for donations of up to 20% of taxable income for the 2020 year of assessment.
Extension of time periods
The revised Draft Disaster Management Tax Relief Administration Bill, 2020 retains the provisions in relations to days which are regarded as ‘dies non’ i.e. days that are not counted for purposes of the Tax Administration Act, with certain amendments.
Monthly (rather than bi-monthly) VAT filings
So-called Category A or B vendors who normally submit bi-monthly VAT returns will be temporarily allowed to submit their returns monthly.