We, at HVM, trust that you our valued clients are still safe and positive in this current lockdown period which have been extended to 30th April 2020. This effectively mean as it stands now that our offices will physically open on Monday, 4 May 2020. We can also report that all our staff are healthy and safe.
As you might know there are a few business relief options available for Small Business. Below we highlight the most important but also feel free to click on the link to visit our website (https://www.hvm.cc/tax-guides).
Also to download under the guides a very useful guide called The-Small-Business-COVID-19-Survival-Guide by Marnus Broodryk.
To refresh what you may have read in the media the following. Government announced the following with effective date 1st of April 2020.
A: COVID-19 EMPLOYEE / EMPLOYER TEMPORARY RELIEF SCHEME
1. Should an employer as a direct result of Covid-19 pandemic close its operations for a 3 months or lesser period and suffer financial distress, the company shall qualify for a Covid-19 Temporary Relief Benefit;
2. Normal benefits shall not be applicable (such as for every 4 days work a 1 day credit);
3. Benefit will only pay the cost of salary for the employees during the temporary closure of the business (Gazette very vague is business owners are included);
4. Benefit will be capped to a max. of R17 712 per month per employee and an employee will be paid in terms of the income replacement rate sliding scale (38% – 60%) as provided. (The largest pay-out to a staff member will be R6732.00 per month, for those employees earning more than R17 712.00 per month, and the minimum will be in line with the current legislated minimum wage);
5. Should an employee’s income determined in point 4 above fall below the minimum wage, the employee will be paid a replacement income equal to minimum wage of the sector concerned;
6. Qualifying employees will receive a benefit calculated in terms of section 12 & 13 of the UI Act, provided that an employee shall receive a benefit of no less than minimum wage;
7. For the company to qualify it must:
7.1 Register with the UIF;
7.2 Must comply with the application procedure for financial relief scheme; and
7.3 Closuse must be directly linked to Covid-19 pandemic
Application procedure
Apply by reporting their closure to Covid19ters@labour.gov.za and then be an automatic response outlining the application process;
Employer shall be required to furnish the UIF with following completed documents;
Letter of authority from company;
Signed Memorandum of Agreement (MOA) from the employer or Bargaining Council with the UIF;
An employee who is being paid by the employer during this period is not entitled to this benefit
B: DEFERRAL OF PAYE
Deferral of 20% of PAYE liability, without SARS imposing administrative penalties and interest for the late payment;
PAYE 20% deferral only applies for April 2020 payroll, therefore payment of 7 May 2020;
The deferred PAYE liability must be paid to SARS in equal instalments over the 6 months period commencing on 1 August 2020 (therefore 1st instalment on 7th of September) – note that normal penalty and interest will be charged if fail to make payment on installments;
C: DEFERRAL OF PROVISIONAL TAXES
Deferral a portion of the payment of the 1st and 2nd provisional tax liability, without SARS imposing administrative penalties and interest for the late payment;
The 1st provisional tax payment (due from 1 April to 30 September) will be based on 15% of the estimated total tax liability while the 2nd provisional tax payment (from 1 April 2020 to 31 March 2021) will be based on 65% of estimate tax liability;
Taxpayers with deferred payments will be required to pay the full tax liability when making the 3rd provisional tax payment in order to avoid interest charges (etc. before 30 September 2021 for a company with a Feb Year End);
Must have a turnover of less than R50 million for companies. For individuals trading in personal capacity still need to be fixed. (Possibly turnover less than R5 million and no more of 10% of income is earned from interest, dividends, rental & remuneration);
D: EMPLOYMENT TAX INCENTIVE (“ETI”) PROPOSAL
ETI program available for persons between ages 19 to 29 earning less than R6 500;
Max monthly ETI claimable per qualifying employee is limited to R1 000 in 1st year and R500 in 2nd year and only claimable for first 24 months;
ETI program expanding for period beginning 1 April 2020 till 31 July 2020;
Increasing the max amount from R1 000 to R1 500 per employee for 1st year and from R500 to R1 000 for the 2nd year;
Only applicable if you were registered with SARS as at 1 March 2020
E: BUSINESS “LOAN” RELIEF
There are various business relief packages available either through the SAFT via Absa (Oppenheimer money – https://www.absa.co.za/personal/covid-19/south-african-future-trust/ ) or Business Partners / Sukuma Business Relief (Rupert money – https://finance.businesspartners.co.za/financial-aid-for-formal-small-an… ). In both cases it is important to note that this will be a normal loan that will be repaid in future. Benefits like 0% interest for the first 12 months make this attractive. Currently the Business Partners website is “temporary closed”. (If links do not work copy and paste into your browser)
F: ESSENTIAL SERVICES
If you qualify as an essential services you can apply for a documents from CIPC which allows you to still carry on with business. When your staff need to travel in the lockdown with this certificate they need to have a letter from the company stating their full names, ID number and that they’re an employee. Please visit www.bizportal.gov.za/essential_service.aspx for more information.
If you’re not 100% sure if you qualify please contact us. HVM can assist you at a small fee to help you applying for this certificate. We can supply you with relevant information for you to use in your application. We unfortunately cannot do the application for you.
Our doors are open “virtually”! All our staff is available by email and you can reach the office at 076 288 4273