Following the media statement issued by the Minister of Finance on 29 March 2020 on Tax Measures to Combat the COVID-19 pandemic, the National Treasury and the South African Revenue Service (SARS) published, for public comment, the 2020 Draft Disaster Management Tax Relief Bill and the 2020 Draft Disaster Management Tax Relief Administration Bill. These draft Bills provide the necessary legislative amendments required to implement the COVID-19 tax measures. The measures contained in these draft Bills will take effect on 1 April 2020.
The 2020 Draft Disaster Management Tax Relief Bill and the 2020 Draft Disaster Management Tax Relief Administration Bill as well as the Draft Explanatory Memorandum containing a comprehensive description of the proposed tax amendments regarding COVID-19 tax measures can be found on the National Treasury (www.treasury.gov.za) and SARS (www.sars.gov.za) websites.
National Treasury and SARS hereby invite comments in writing on the 2020 Draft Disaster Management Tax Relief Bill and the 2020 Draft Disaster Management Tax Relief Administration Bill. Please forward written comments to the National Treasury’s tax policy depository at 2020AnnexCProp@treasury.gov.za and Adele Collins at firstname.lastname@example.org by close of business on 15 April 2020.
In basic terms, the 20% deferral on Employees Tax (PAYE) is drafted as follows:
- Effective date is 01 April 2020 – Meaning that from end of April, 20% of PAYE can be deferred over the next 4 months.
- It will be for a limited period of 4 months, from April 2020 till July 2020.
- Only tax compliant small to medium sized businesses will qualify. (Meaning no returns outstanding nor any existing tax liabilities.)*Turnover must be under R 50mil annually.
- If you qualify for above, it will work as follows:- You can defer 20% of you PAYE liability to SARS for the following months: April 2020, May 2020, June 2020 & July 2020.
– The 20% deferral should then be paid over in the following 6 months to SARS (August 2020 – January 2021).
– Below is a simple example of how it will work.
|Payroll||Gross Liability||20% Deferral||80% Payment||Due date for payment|
|April 2020||R50 000.00||R10 000.00||R40 000.00||07 May 2020|
|May 2020||R50 000.00||R10 000.00||R40 000.00||05 June 2020|
|June 2020||R50 000.00||R10 000.00||R40 000.00||07 July 2020|
|July 2020||R50 000.00||R10 000.00||R40 000.00||07 August 2020|
|Cash Flow Benefit||R40 000|
|Deferred PAYE liability is payable to SARS as follows:|
|Payroll||Amount Payable||Due date for payment|
|August 2020||R6 666.67||07 September 2020|
|September 2020||R6 666.67||07 October 2020|
|October 2020||R6 666.67||06 November 2020|
|November 2020||R6 666.67||07 December 2020|
|December 2020||R6 666.67||07 January 2021|
|January 2021||R6 666.67||05 February 2021|
In conclusion, the deferral on PAYE is only applicable as from April 2020’s PAYE due to SARS. And one must be tax compliant in order to apply for this deferral.
Once the Final Draft is circulated and gazetted into Government, we will advise accordingly.