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Further Tax Measures To Combat The Covid-19 Pandemic

FURTHER TAX MEASURES TO COMBAT THE COVID-19 PANDEMIC By Charteris and Barnes

This is the fifth in a series of updates pertaining to any relief measures that have been made available by both the private and public sector. The purpose is to provide some clarity on the extended Tax Measures recently announced by the Department of National Treasury.

SUMMARY OF FURTHER MEASURES

Attached at the bottom of this page is a media statement issued on (23 April 2020). The statement outlines the various interventions which are highlighted below :

  • Skills Development Levy Holiday: Effective 01 May 2020 there will be a four-month holiday on SDL contributions;
  • Fast tracking of VAT refunds: – This appears to be aimed at smaller VAT vendors;
  • Carbon Tax deferrals: – Industry specific, but there are further details in the attached media statement;
  • A deferral for the payment of excise taxes on alcoholic beverages and tobacco products: – Industry specific, but there are further details in the attached media statement;
  • Postponing the implementation of some Budget 2020 measures: – This refers to the proposed limitations on assessed losses brought forward from 2019 and limiting interest deductions in certain instances;
  • An increase in the expanded employment tax incentive (ETI) amount: – The wage subsidy has been increased from R 500 per month per employee to R 750 per employee per month. This applies to employees who earn less than R 6,500.00 per month;
  • An increase in the proportion of tax to be deferred and in the gross income threshold for automatic tax deferrals: – There is an increase in the % of employees tax that can be deferred, from 20% to 35%. Similarly, there are deferrals on provisional income taxes. Most importantly, the threshold for entities that qualify for this relief, has been increased from a gross income or R 50 Million per annum (ex. VAT) to R 100 Million per annum (ex. VAT). The income threshold will be applied for the current financial year, so the negative effects of the lockdown will be included in the determination of the annual income;
  • Case-by-case application to SARS for waiving of penalties: – This applies to both larger and small businesses. The relief will be in the form of deferral of payments without incurring penalties. The entity will have to demonstrate that they are incapable of making the payments. Applications are considered on a case-by-case basis and will be made directly to SARS.

The financial-aid measures such as the debt-relief and growth resilience low-interest loans for SMME’s remain available as does the COVID19 TERS UIF scheme, where we are seeing some positive results.