Towards the end of July, president Cyril Ramaphosa announced a series of emergency tax relief measures in response to the continuing Covid-19 pandemic and recent unrest, helping affected and tax compliant businesses recover and ensure livelihoods for employees.
Further details of the proposed measures were provided by the minister of finance and the National Treasury.
The South African Revenue Service (SARS) said it will implement these tax relief measures because compliant taxpayers have paid their fair share of tax, making it possible for the government to provide such a temporary safety net in a time of extreme difficulty.
SARS Commissioner Edward Kieswetter said: “The first quarter of the current financial year had exceeded expectations and had outperformed revenue collections for the same period over the past three years.”
Kieswetter reiterated SARS’ commitment to providing clarity and certainty to taxpayers so that they fulfil their legal obligations effortlessly and pay what is due. He said SARS will endeavour at all times to “make it easy and seamless for taxpayers when they transact with the organisation”.
However, he sent out a clear and unequivocal message that SARS has the capability to “detect and it make it costly for those that are determined to be non-compliant with their legal obligations and engage in criminal malfeasance through fraudulent means against the organisation.”
“The use of big data, artificial intelligence and the latest technology enables SARS to offer digital services to protect taxpayers and staff during the Covid-19 lockdown restrictions and further buttresses SARS efforts in delivering on our mandate.”
SARS provided an overview of the relief measures applicable to Small, Micro, and Medium Enterprises (SMMEs) and others. The announced measures are:
- The introduction of a tax subsidy of up to R750 per month for the next four months for private sector employers who have employees earning below R6,500. This subsidy will be provided under the current Employment Tax Incentive.
- Tax compliant businesses with a gross income of up to R100 million will be allowed to delay 35% of their pay-as-you-earn (PAYE) liabilities over the next three months, without penalties or interest.
- Tax compliant businesses in the alcohol sector can apply to the SARS for deferrals of up to three months for excise duty payments.
Employment Tax Incentive (ETI) tax relief
Tax relief under the ETI is available for a four-month period from 1 August 2021 to 30 November 2021. The first extended ETI can be claimed in your August EMP201, SARS said. The maximum monthly amount that will be permissible under the ETI during this period will be increased according to the following criteria:
- Employees are eligible under the current ETI Act from R1,000 to R1,750 per month in the first qualifying 12 months and from R500 to R1,250 per month in the second 12 qualifying months.
- Employees from the ages of 18 to 29, who are no longer eligible for the ETI as the employer has claimed ETI in respect of those employees for 24 months, or are not eligible as they were in the employer’s employment before 1 October 2013, from not eligible to R750 per month.
- Employees from the ages 30 to 65 years who are not eligible for the ETI due to their age, from not eligible to R750 per month.
SARS said it will also pay monthly ETI refunds for the four-month period instead of every six months, as is normally the case. Refunds will commence by 13 September 2021, subject to any verification or audit steps that may be required.
To claim tax relief under the ETI:
- Capture the full PAYE Liability (The form will calculate the PAYE payable at 100%, you cannot change this value).
- Capture the ETI Calculated.
- Calculate 65% of the PAYE Liability in terms of the tax relief for PAYE for the first three (3) months.
- Limit the ETI Utilised to the lesser of ETI Calculated or 65% of the PAYE Liability for the first three months or 100% of the PAYE liability in the fourth month.
- Calculate the Total Payable as (65% of the PAYE Liability for the first three months, or 100% PAYE liability for the fourth month) less ETI Utilised plus SDL Payable plus UIF Payable.
PAYE tax relief period
The tax relief for PAYE is available to qualifying businesses for the three month period from 1 August 2021 to 31 October 2021. The first deferment can be claimed in your August 2021 EMP201 return, which is due by 7 September 2021.
To claim tax relief for PAYE:
- Complete the EMP201 as per normal with the full PAYE Liability (the form will calculate the PAYE payable at 100%, you cannot change this value)
- Calculate the Total Payable as 65% of the PAYE Liability plus SDL Payable plus UIF Payable.
SARS warned that those who make late payments would forfeit the benefit of the tax relief for PAYE, and SARS will impose penalties and interest on the calculated Total Payable.
Payment of the deferred PAYE liability
After the 7th of November 2021, SARS said it will determine the four equal payments for the total amount that you have deferred and include it in your monthly Statement of Account.
Payments will be made over a four-month period that will commence on 7 December 2021, with the last payment due by 7 March 2022.
Alcohol industry: Payment Deferral of Excise Duty Payments on Alcohol
The tax body said that due to the restrictions on the domestic sale of alcoholic beverages, tax compliant businesses in the alcohol sector can apply to SARS to obtain deferrals of up to three months for excise duty payments.
It stressed that this can only be done after the circumstances are set out to justify the deferral. Clients must apply in terms of rules 105.01 to 105.04 of the Customs and Excise Act, 1964 for deferral
of payment, and each case will be considered on its merit.
“This is expected to help a significant number of businesses that are under pressure in terms of cash flow and their ability to honour payments to SARS,” it said.
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