Tax relief, other relief packages announced for SMEs

For tax-compliant businesses with an annual turnover of less than R50m.
Image: Shutterstock

Several relief packages for small businesses, including tax relief, have been announced since the country went into lockdown in an effort to curb the spread of Covid-19.

However, there is frustration and uncertainty around the difficulties in finding these programmes, accessing their webpages, or how each one works and how to apply, says Spartan SME Finance CEO Kumaran Padayachee.

“As with any crisis, timing is always critical and many of these programmes are understandably still being operationalised,” he adds.

“The financial relief announcements have been somewhat of a healing balm to the ears of entrepreneurs”. The swift reactions and proactivity of the government and the private sector in putting these lifelines in place is highly commended, says Padayachee.

National Treasury over the weekend announced tax relief measures for tax-compliant businesses with an annual turnover of less than R50 million.

The relief covers employees’ tax (PAYE), provisional tax payments and the employment tax incentive.

Joon Chong, tax partner at Webber Wentzel, says there has been no relief outlined in terms of late payments of value-added ax (Vat). She notes that Vat vendors who have monthly payment obligations has a payment due on 7 April.

“There is no indication that there will be any relief (for late payments). This means that Vat vendors should only delay their Vat payments as a last resort to avoid the automatic 10% late payment penalty when payments are made after their due dates,” she warns.

Small businesses will be able to defer payment of 20% of their employees’ tax from 1 April to 31 July this year, without penalties and interest.

Chong says the 20% deferral will be payable in equal instalments over six months from August this year. “The first payment instalment must be made on 7 September.”

Qualifying small businesses will also be able to defer their first and second provisional tax payments.

Only 15% of the estimated tax liability for the year of assessment is payable for the first provisional tax payment – instead of 50%. With the second provisional payment 50% should be paid. The remainder of the estimated tax liability should be paid by the third top up date to avoid interest.

According to Chong there is still no relief measures in place for sole proprietor businesses. She says one possibility is that they could be eligible for similar relief if their turnover is less than R5m and less than 10% of their income is from interest, dividends, or rental and remuneration.

Employers will also be able to find relief in terms of the employment tax incentive. This include an additional R500 per qualifying employee; R500 for each qualifying employee – aged between 18 and 29 years – where the employer had previously claimed from the incentive for the full 24 months; and R500 for each employee between 30 and 65 years who does not qualify for the incentive because of their age.

The reimbursements will be processed monthly as opposed to twice a year.

Chong says no tax relief was offered to companies with turnover of more than R50m.

However, she says the Tax Administration Act (TAA) provides for the remittance of penalties in exceptional circumstances.

SARS must remit the penalty, or a portion thereof, if it is satisfied that the taxpayer was “incapable” of complying with the obligations under the relevant tax acts.

One of the circumstances that may render a taxpayer incapable of complying with his tax obligations is a natural or human-made disaster. A civil disturbance, or disruption in services may also render a person “incapable of complying with his tax obligations as set out in the relevant act”.

Chong also notes that the TAA provides for the remittance of penalties in a case of serious financial hardship where there is an “immediate danger” that the continuity of business operations and the continued employment of its employees are jeopardised.

Keith Engel, CEO of the South African Institute of Tax Professionals, says tax practitioners need to inform their clients of the available Covid-19 relief mechanisms.

“These relief mechanisms not only include assistance on the tax side, but also subsidies from other departments, such as the Department of Labour and Small Business.”  He adds that thorough paperwork will be essential for prompt access to the relief.

Spartan SME Finance has created a Covid-19 relief registry. Relief initiatives typically go through the phases of announcement, followed by development, and then they put the operations in motion, says Padayachee.

“This includes processing applications which is at the heart of what small business owners want to know right now,” he says.

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Tax relief?! What purpose does it serve when your profitability is in lockdown and you do not have the cash flow or a taxable profit? This act of kindness from SARS is like handing a bottle of water to a guy who is drowning.

Craptacular.

Lots of small businesses hardly make any profit as it is. there are no tax to get relief from.
This crash is like an avalanche … slowly at first and then suddenly the whole thing comes crashing down – unstoppable.
Even this meager attempt at assistance will be too late anyway – by the time the paperwork is sorted out most small businesses will be past intensive care.
We need immediate help in the form of cashflow … not delayed tax and such B/S

Virtually nothing there on offer.

I am a sole proprietor. According to the above article, I don’t see any tax relief for us, or am I wrong ? I tell you what, if SARS really wants to help me, they can give me just one year without a verification/audit. I have been verified/audited by SARS since the Anglo Boer War, and never have they adjusted my assessment by a single cent, yet they verify/audit me every friggin single year. Mr Kieswetter, if you read this, help a brother !

There is nowhere to hide from the message of the pangolin. You can still avoid the message from the Sherriff of the court, but this message from the pangolin was perfected during billions of years of trial and error, to reach the recipients for whom this code was intended.

The pangolin inscribed the code on a strand of DNA and wrapped it in a layer of fat to protect it. The pangolin used the most efficient courier service to spread the code across the globe. This piece of code on a strand of DNA is the most effective transporter of messages because the method was perfected over billions of years with countless processes of trial and error.

The code reaches parts of the globe that does not even have internet services or cellphone reception. No human-created message is transmitted more securely and more effectively than this code wrapped in a membrane of fat. The best scientists are frantically working to crack this ancient code, to no avail. The pangolin wrote a code that nobody can decipher.

It is only a matter of time before every single person on earth receives this message. How we react to the message depends on our immune system. A strong immune system reads the message, is somewhat shocked by it, but then discards it and forgets about it.

The pangolin inscribed the following information on the piece of DNA: “You kept me locked up in a small space, now go and experience what that feels like. You took me out of my natural environment, now experience what that feels like. You deprived me of my freedom of choice, my livelihood, my quality of life, and then you killed me. This message is to help you to understand the situation that you put me in because now, you will be put in a similar situation by powers of your own making. You will experience how those who are supposed to protect you, lock you up and deprives you of your freedom.”

All of this is inscribed on a piece of DNA that we call a virus.

Dear Joon Chong (tax Partner at Weber Wentzel): Since when is Vat payable on the 7th of the month? This is the second incorrect statement that I have seen in a Moneyweb in the last week.

Bloodhounds also don’t give up …

And all the public sector workers are interested in are their salary INCREASES.

The statistic is that two thirds do nothing anyway

My client issued a force majeure today. No work and no pay until further notice. Now all SARS can do is to scream for money, or in this case, muffle their screams somewhat in order to fool the usual victims. Big surprise coming your way, guavamund. You didn’t save for a rainy day, now a hurricane arrived with no money in the bank. Bwahahaaaa

End of comments.

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