COVID-19

Since the current COVID-19 pandemic has been declared a national state of disaster, many households, businesses and ultimately lives have been irrevocably changed.  Government has announced various relief measures in an attempt to provide for the wellbeing of the people of South Africa and navigate our already troubled economy through these uncertain times.

We have summarised the details of the application and implementation of these relief measures below, as are known at present, for your convenience. We will continue to update these with further developments and changes.

The majority of our staff continue to work remotely from under Level 3 Regulations.  We will continue to utilise our investment in digital infrstracture to conduct client meetings virtually as face-to-face meetings at our offices remains prohibited for now.  The collection and delivery of client documents are allowed, following our health and safety protocols put in place. Telephone lines remain active – please feel free to reach out.

Tax Relief Measures

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Tax subsidy SARS ETI Payments Delay PAYE liabilities Provisional CIT Payments Occupational Health and Safety Compensation Fund Skills development levy holiday Fast-tracking of value-added tax (VAT) refunds: Filing and first payment of carbon tax liabilities Excise taxes on alcoholic beverages and tobacco products Postponing the implementation of some Budget 2020 measures Increasing the deduction available for donations to the Solidarity Fund: Expanding access to living annuity funds:
The Employment Tax Incentive (ETI) programme was introduced to promote employment, particularly for young workers.

Government proposed the expansion of the ETI Programme for four months (1 April 2020 to 31 July 2020), to minimise job losses due to impact of COVID 19 on companies.

To get cash in the hands of compliant employers Compensation for occupationally acquired COVID-19
Effective 20 March 2020
CompEasy system or Mutual Association Claims use Code U07.1
Can be contracted as employee in workplace or as part of travel
Relief 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. This amount will be increased to R750 per month, for the next 4 months for any employee in the private sector.

Impact on current ETI Law:
1. Increase the max ETI claimable by R 750 for eligible employees. (therefore can claim R 1750 per employee)

2. ETI reimbursements  to the amount of R 750 for non eligible employees;

for employees aged 18 to 29  non-eligible for ETI (already claimed for 24 months) and;

employees aged 30 to 65 who are non-eligible (due to age).

Accelerate payments of ETI from twice a year to monthly. The first set of tax measures allowed tax compliant businesses to defer 20 per cent 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 proportion of employees’ tax that can deferred will be increased to 35 per cent.

The relief provided are repayable to SARS in equal instalments over six months effective from August 2020 (your first payment will be repayable on 7 September) additional to the normal PAYE payments due in these periods

However ,interest and penalties will apply if the employer has understated the PAYE liability for any of the four months.

1. First Provisional Tax Payment due from 1 April 2020 to 30 September  based on 15% of the estimated total tax liability (Previously 50%)

2. Second Provisional Tax Payment due from 1 April to 31 March based on 65% of the estimated total tax liability (Previously 100%)

3. Portion of first and second  provisional payments deferred above, payable when third provisional tax payment becomes due in order to avoid penalties and interest. For Micro Businesses this payment must be made on the date specified in the notice of assessment

However, interest and penalties will apply in instances where, upon assessment, it is discovered that a taxpayer does not qualify for relief under the proposed amendments.

Deals with exposure risks and workplace controls – Total temporary disablement
– Suspected cases self-quarantine (employer responsible)
– Confirmed cases if Fund accept liability, will pay for 30 days
– Medical aid
– Death benefit Can be contracted as employee in workplace or as part of travel
From 1 May 2020, there will be a four-month holiday for skills development levy contributions (1 per cent of total salaries) to assist all businesses with cash flow. Smaller VAT vendors that are in a net refund position will be temporarily permitted to file monthly instead of once every two months, thereby unlocking the input tax refund faster and immediately helping with cash-flow. SARS is working towards having its systems in place to allow this in May 2020 for Category A vendors that would otherwise only file in June 2020. The filing requirement and the first carbon tax payment are due by 31 July 2020. To provide additional time to complete the first return, as well as cash flow relief in the short term, and to allow for the utilisation of carbon offsets as administered by the Department of Mineral Resources and Energy, the filing and payment date will be delayed to 31 October 2020 Due to the restrictions on the sale of alcoholic beverages and tobacco products, payments due in May 2020 and June 2020 will be deferred by 90 days for excise compliant businesses to more closely align tax payments through the duty-at-source system (excise duties are imposed at the point of production) with retail sales. The 2020 Budget announced measures to broaden the corporate income tax base by (i) restricting net interest expense deductions to 30 per cent of earnings; and (ii) limiting the use of assessed losses carried forward to 80 per cent of taxable income. Both measures were to be effective for years of assessment commencing on or after 1 January 2021. These measures will be postponed to at least 1 January 2022. The tax-deductible limit for donations (currently 10 per cent of taxable income) will be increased by an additional 10 per cent for donations to the Solidarity Fund during the 2020/21 tax year

Adjusting pay-as-you-earn for donations made through the employer: Employers can factor in donations of up to 5 per cent of an employee’s monthly salary when calculating the monthly employees’ tax to be withheld. An additional percentage that can be factored in of up to 33.3 per cent, depending on the employee’s circumstances, will be provided for a limited period for donations to the Solidarity Fund. This will lessen cash flow constraints for employees who donate to the Solidarity Fund

Individuals who receive funds from a living annuity will temporarily be allowed to immediately either increase (up to a maximum of 20 per cent from 17.5 per cent) or decrease (down to a minimum of 0.5 per cent from 2.5 per cent) the proportion they receive as annuity income, instead of waiting up to one year until their next contract “anniversary date”. This will assist individuals who either need cash flow immediately or who do not want to be forced to sell after their investments have underperformed.
Requirements 1.Only for employees earning > R6 500 under the ETI

2.Tax compliant employer

1.Normal ETI rules;
2.Tax compliant employer
1. Gross Income < 100 million;
2. Gross income not include more than 10% passive income
3. Any Companies, trusts, partnerships or individuals which conduct a trade
4. Tax Compliant
5. Registeres as employer with SARS by 1 March 2020
1. Gross Income < 50 million;
2. Gross income not include more than 10% passive income
3. Any Companies, trusts, partnerships or individuals which conduct a trade
4. Tax CompliantMicro Businessesas defined do not need to comply with point 1 and 2
– 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
Effective date 1 April 2020 and ending on 31 July 2020 1 April 2020 and ending on 31 July 2020 4 months effective from 1 April 2020 to 31 July 2020 (for Payments due on 7 May 2020 to 7 August 2020) 1 April 2020 to 31 March 2021 20 March 2020 01-May-20 01-May-20 Due by 31 July 2020 Due in May 2020 and June 2020
Administrative matters The full employees’ tax liability withheld or deducted from remuneration must be declared on the EMP 201, only 65% (Previously 80%) of the employees’ tax liability must be PAID by the relevant due dates The amount that must be declared on the IRP6 is the total estimated tax liability (that is, as per normal process 100%), only PAY 15% (first provisional tax period) of the estimated tax liability or 65% (second provisional tax period) of the estimated tax liability reduced by the first provisional tax payment paid, by the relevant due dates.
Guide Click here Click here Click here Click here Click here
Claims Online claims
Compensation Fund
CompEasy (www.labour.gov.za)
Rand Mutual Assurance
CompCare (www.randmutual.co.za)
Federated Employers Mutual
IMS (httos://roe.fem.co.za)
Manual claims
Compensation Fund covid19claims@labour.gov.za
Rand Mutual Assurance
contactcentre@randmutual.co.za
Federated Employers Mutual
FEM Registry@fema.co.za

Updated 23 April

Government related funding to businesses and others

SMMESA Solidarity response fund UIF Temporary employer/employee relief scheme (TERS) National Disaster benefit Tourism Relief Fund
The Business Growth and Resilience Facility SMME Relief Finance Facility SEFA-Debt Restructuring Facility
Descriptions Specifically created to enable participation of SMMEs in supply value chains, in particular those who manufacture (locally) or supply various products that are in demand, emanating from the current shortage due to COVID-19 pandemic.  Debt Relief Fund for SMMEs to be eligible for assistance under the debt relief fund, the applicant must demonstrate the direct link of the impact or the potential impact of Covid-19 on business operations. Geared towards SEFA-funded (Small Enterprise Finance Agency) that are negatively affected by COVID-19, in efforts to reduce the instalment burden of loan obligations on affected SMME’s. Illustrate direct linkage of business distress and COVID-19. Fund is set up to assist with the prevention, detection, care for hospital or medical care and to support those whose lives have been disrupted by the pandemic.
A
Through this Fund, individuals and organisations will be able to support these efforts through secure, tax-deductible (18A, subject to limitation provided in sec18A ) donations into the following bank account:Bank: Standard Bank
Branch Name: Sandton City
Account Name: Solidarity Fund
Account No: 023070021
Account Type: Current account
Branch Code: 051001SWIFT Code: SBZAZAJJ*For all EFT payments, please include your Identity / Company Registration / Trust number, as applicable, to facilitate your Section 18A tax certificate preparation.
Created to bring relief to employers, who had to close their business or were financially negatively impacted as a direct result from the current Corona virus (COVID-19) pandemic, for a period had to send employees home with no pay or reduce employees salaries. This constitutes a temporary lay-off. If the employer cannot pay his employees’ full salaries for this period.

The TERS may fund these distressed companies by means of pay-outs to employees, administered by the UIF.
(can only claim this if employees does not claim UIF themselves)

Distress company only be funded if requirements are met and able to demonstrate that it will/has embarked upon a turnaround or sustainability programme which will result in job prevention at the expiry of the funding agreement.

Created to bring relief to employers, who had to close their business, as a direct result from the current Corona virus (COVID-19) pandemic  for a period and send employees home. This constitutes a temporary lay-off. If the employer cannot pay his employees for this period.

The TERS reflief (discussed in seperate a column) are calculated  on the income replacement sliding scale, which can result in  low earners receiving a benefit lower than the minimum wage. The National Disaster benefit will therefore be equal to minimum wage of R 3500, to combat this.

This benefit will be de-linked from the UIF’s normal benefit structure and therefore the normal rule that for every 4 days worked the employee accumulated 1 credit day and maximum credit days payable is 365 for every 4 completed years will not apply

The Department of Tourism has made an additional R200 million available to assist SMEs in the tourism and hospitality sector who are under particular stress due to the new travel restrictions.
Application site Click here Click here Click here email: MosaB@ccma.org.za
Applications open 2 April 2020 2 April 2020  
Forms       inforTERS@labour.gov.za
Website Click here     Click here Click here Click here
Note:
Amount of financial assistance Based on funding need of the business These interventions will be structured to match the patterns of the SMMEs cash flows, as well as the extent of the impact suffered.

**Note: SMME’s in financial distressed before COVID 19 pandemic, do not qualify for relief

Depending on SEFA-funding received Provide Three Types of Relief:
1. Wage subsidy
2. Wage Subsidy and training
3. Turnaround solution
Launch date 24 March 2020 24 March 2020 26 March 2020
Requirements 1. Business must be tax compliant and UIF Compliant
2. Registered at CIPC from at least 28 February 2020
3. Registered on the National SMME Database
4. 100 % South African Owned Shareholding
5. 70% of employees must be South African
6. Turnover < R 50 Million
1. Business must be tax compliant and UIF Compliant
2. Registered at CIPC from at least 28 February 2020
3. Registered on the National SMME Database
4. 100 % South African Owned Shareholding
5. 70% of employees must be South African
6. Turnover < R 50 Million
7.Provide proof that COVID-19 negatively affects your business
SEFA Funded entities
Negatively affected by COVID-19
1. UIF compliant
2. If not compliant must become compliant
3. Turnaround or sustainability programme
4. Meet obligations
5. UIF pay employerNote: Companies contemplating a short term shut down must notify the department who will dispatch a team to visit these companies to provide assistance with the processing of UIF ClaimsEmployers to report closures to: covid19ters@labour.gov.za. (Automatic reply will indicate application process)
1.UI19 and UI2.7 (completed by Employer)
2.UI 2.1 (application form)
3.UI 2.8 (bank form completed by the bank)
4.A letter from the Employer confirming company shutdown or employee’s
“temporary lay-off” is due to the Corona Virus
5.Copy of employee’s ID documentNote: An employer or employee cannot apply for the “National Disaster Benefit” and
any other UIF benefit simultaneously.
1. Must be a formally registered business with Companies and Intellectual Property Commission (CIPC).
2. Turnover must not exceed R2.5 million per year.
3. Must have a valid tax clearance certificate.
Guaranteed employment for a minimum number of staff for a period of 3 months.
4. Proof of minimum wage compliance.
5. Must provide proof of UIF registration for employees employed by the business.
6. Be an existing tourism-specific establishment as outline in the scope of application (suppliers and intermediaries are not eligible).
7. Must be in existence for at least one business financial year.
8. Prove that the relief is required as a result of the impact of COVID-19.
9. Must submit statements of financial position; over 12 months’ bank statement, balance sheet, income statements, cash flow statements.
10.Indicate the intended use of the resources.
Guide Click here Click here Click here Click here
Finance scheme Must be compliant
Prime less 5%, Prime +10% if abuse
Loan for 6 months from 1 April 2020
Not applicable to self
employed people and hawkers (Tailor made facilities  for Informal Sector, Self employed and spaza shops)
Fund working capital
Prime less 5%, Prime +10% if abuse
Payment Holiday for maximum of 6 Months. Using the income replacement rate sliding scale of 38% (for High earners) up to 60% (for Low earners) as provided by the Unemployment insurance fund Act, subject to the maximum threshold which is currently R 17 712. A maximum allowance of R 6 730 (R 17 712 x 38%) per employee is available.

For the duration of the shutdown or a maximum period of three months, the benefit will be not less than the minimum wage referred to as a ‘flat rate’ of R3500 per month (refer to discussion under National Disaster Benefit).

This benefit will be at a flat rate equal to the minimum wage (R3 500) per employee (benefit payable is the difference between what employer pays and UIF Benefit) for the duration of the shutdown or a maximum period of three months, whichever period is the shortest.

If an employee is ill, temporary lay-off or unemployed for longer than three months, the normal UIF benefits as explained below will apply.

The relief will be distributed in a spatially equitable manner to ensure that all provinces benefit.
At least 70% of beneficiaries will be businesses that are Black owned.
At least 50% of beneficiaries will be businesses that are women owned.
At least 30% of beneficiaries will be businesses that are youth owned.
At least 4% of beneficiaries will be businesses that are owned by people with disabilities.
Relief to be used for Working capital
Stock
Bridging finance
Order finance
Equipment finance
Raw materials
Labour
Operational costs
1. Hotels, resort properties and B&B’s
2. Restaurants, conference venues, professional catering business and tourist attractions
3. Tour operators, travel agents, tourist guides, car rental companies and coach operators
Payment history n/a n/a n/a n/a n/a
Tax clearance Good Standing (Department to provide assistance  to get compliant); UIF Complaint Good Standing  (Department to provide assistance  to get compliant) Good Standing Good Standing Good Standing Good Standing

Updated 4 June

Philantropic Finance

SAFT Business Partners (Sukuma-Relief-Rrogramme)
SMME’s Sole Proprietors SMME’s (CC’s, Companies, Trusts)
SAFT have been appointed to administer the R 1 billion donation by the Oppenheimer family in support of small businesses that are negatively impacted by Covid-19. Business Partners have been appointed to administer the R 1 billion donation by the Rupert family in support of small businesses that are negatively impacted by Covid-19.
Descriptions Loans to SMME’s to facilitate weekly payouts to permanent employees Grant to Individuals conducting businesses in their own name, that are negativley affected by Covid-19 Grant and Loans to SMME’s that are negativley affected by Covid-19
Application site Unfortunately this fund is depleted. Click here Click here
Applications open Closed   3 April 2020, **temporarily closure of the application platform for the Sukuma Relief Programme which may only reopen for new application for the following two reasons:
i. Because some of the previous applicants could not be verified and/or approved; or
ii. Because we have managed to secure additional capital.
  4 April 2020, **temporarily closure of the application platform for the Sukuma Relief Programme which may only reopen for new application for the following two reasons:
i. Because some of the previous applicants could not be verified and/or approved; or
ii. Because we have managed to secure additional capital.
Forms   online online
Website Click here Click here
   
   
   
Amount of financial assistance R 25 000 grant per Qualifying business as a grant (non-repayable) R 25 000 grant per Qualifying business as a grant (non-repayable) AND a unsecured interest bearing loan between R 250 000 an R 1 Million. Loan is interest free for the first 12 months. Loan is repayble after 12 months and bear interest at the prime lending rate.
Requirements 1. Provide proof that COVID-19 negativley affects the business
2. Tax Compliant
1. Formally registered
2. Provide proof that COVID-19 negativley affects the business
3. Tax Compliant
4. Regulatory compliant
Documentation needed 1. Copy of ID document
2. Copy of business license (where applicable)
3. Copy of tax clearance certificate4. 100 % South African Owned Shareholding
5. 70% of employees must be South African
6. Turnover < R 50 Million
7.Provide proof that COVID-19 negatively affects your business
1. Compiled 2019 Annual financial statements
2. Management accounts
3. Latest available EMP201
4. 3 months’ bank statements
5.  Rental (premises) statement
6. Credit agreements Statements
7. Motivation and supporting documentation illustrating the financial distress suffered by the SME as a result of the COVID-19 outbreak.
8. Statement of assets and liabilities for the main business owner
9. Copies of identity documents of all directors, shareholders, members, and trustees as applicable
10. Copy of marriage certificate including ANC contract, divorce certificate, or death certificate where applicable
11. Close corporation (if applicable) Founding statement
12. Trust documents (if applicable)(trust deed, master’s Authority Certificate, IDs of all trustees)
13. Company documents (registration certificate, MOI,  share register)
14.Confirmation of bank account details issued by the relevant bank
Relief to be used for Operational Cost Payroll, rental, and other monthly operating overheads.
Tax clearance Good Standing Good Standing

Updated 4 June