Topical Issues

COVID-19 – Additional tax relief measures announced on Tuesday, 21 April 2020

President Cyril Ramaphosa announced extraordinary funding measures totalling R500 billion in his speech to the nation last night (Tuesday, 21 April 2020) with the majority of the funds to be channelled into healthcare, vital municipal services and social relief as a result of the coronavirus pandemic. The support package is primarily directed at funding the health response to the coronavirus pandemic and stabilizing the economy with particular focus on assisting the poor and vulnerable, as well as supporting smaller businesses.

A key focus of last night’s speech was the announcement of additional or enhanced tax relief measures, the most important of which were as follows:

1)  Tax deferrals – Pay-As-You Earn (“PAYE”) and Corporate income tax:

  • The previous turnover threshold for tax deferrals has been increased to R100 million from the original threshold of R50 million. Consequently, businesses whose turnover exceeds the R100 million threshold can apply to SARS for deferrals of their income tax payments and SARS will evaluate the applications on a case by case basis.
  • The proportion of a company’s monthly PAYE payments that can be deferred has been increased to 35% from the initial allowance of 20%.
  • VAT refunds will be accelerated. Please note that the government has not provided for the deferral of VAT payments in any form at present.

2)  Skills development levy (“SDL”):

  • A 4-month holiday was announced for SDL contributions.

3)  Carbon tax:

  • A 3-month delay for the filing and payment of carbon tax will be introduced.

4)  Increased deductions for donations to the Solidarity Fund:

  • Taxpayers who donate to the Solidarity Fund will be able to claim an extra deduction from their taxable income.

It is important to note that the above relief measures appear to be available only to those businesses who are tax compliant and whose tax affairs are up to date. Further clarification regarding the implementation of these measures is expected to be announced in the form of an extraordinary budget by the Minister of Finance in due course.

Please note that we at JNS Financial Services are here to support you through the good times and the bad. Therefore, all of our resources are fully at your disposal to help you to get through these troubled times. Please feel free to contact us for any assistance in implementing the above relief measures or for help in making applications to the various coronavirus pandemic relief funds that we have identified and outlined in previous communications.