MAY 2020 – SOUTH AFRICA
COVID-19 REVISED DRAFT TAX BILLS
COVID-19 Revised Draft Tax Bills published for public comment
On 1 May 2020 National Treasury and the South African Revenue Service (SARS) published the revised 2020 Draft Disaster Management Tax Relief Bill and the revised 2020 Draft Disaster Management Tax Relief Administration Bill for public comment.
These draft bills provide the necessary legislative amendments required to implement the additional tax measures aimed at combating the COVID-19 pandemic and take into account public comments received on the initial batch of the draft tax bills published on 1 April 2020. The newly published revised draft bills and explanatory memorandum replace the previous draft bills and explanatory notes.
To see the summary of the proposed tax measures released in a media statement by the Minister of Finance on 23 April 2020, refer to the News Flash of 23 April on our website.
For employers, the most important aspects to take note of in the revised bills are the measurements in respect of the Employment Tax Incentive (ETI):
- For the months of May, June and July the remuneration gross-up requirement has been removed for all age groups if the hours are less than 160.
- In the case of the hours being less than 160 in the month, the ETI amount calculated in respect of the normal age groups must still be grossed down, even though the remuneration was not grossed up, while ETI for the two extended age groups is not grossed down. This is applicable to the months of April, May, June and July
- In all cases, the actual remuneration paid in the month is used to check against the R6,500pm remuneration qualifying threshold and used to calculate the ETI if the employee qualifies
- For the months of April, May, June and July, the following has been deleted:
- The default of a minimum wage or R2 000pm if there is no wage regulating measure.
- For the months of April, May, June and July, the qualifying requirement that the employee’s start date of employment must be on or after 1 October 2013 has been removed. This appears to be applicable to the two extended age groups.
- The proposed increase of the ETI value from R500 to R750 for all age groups, as published in the draft Bill of 1 April 2020, remains the same. This is applicable to all age groups. It is proposed by National Treasury that the additional R250 not claimed as part of the April payroll run can be claimed during the May payroll run.
Note: As the effective date of this proposed change is retrospective to 1 April 2020, this poses a risk to employers and payroll supplier services and has been raised as a concern by the Payroll Authors Group of South Africa (PAGSA).
- SARS will refund the portion of the ETI that exceeds the PAYE liability stated on the EMP201 monthly for the months April to July.
In respect of donations to the Solidarity Fund (only), the current threshold of 5% of the balance of remuneration has been increased to 33.3% for three months or 16.66% for six months. This is applicable to the months April to July.
It should be noted that the revised draft bills were published for public comment (due on 15 May 2020) and cannot be regarded as the final version. Therefore, we recommend that employers get ready for the changes but do not implement them as yet, especially in respect of the ETI.
To view the draft bills and explanatory memorandum, follow the link
Contact our legislation team at firstname.lastname@example.org if you require any additional information.
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