MAY 2020 – SOUTH AFRICA

COVID-19 2nd REVISED DRAFT DMTR BILL

It is important that employers note the following:

Second COVID-19 Draft Disaster Management Tax Relief Bill published for public comments

On 19 May 2020 National Treasury and the South African Revenue Service (SARS) published the second revised 2020 Draft Disaster Management Tax Relief (DMTR) Bill and the revised Draft Notice on Expanding Access to Living Annuity Funds.

Employment Tax Incentive (ETI) to the extended age groups

To be applied and/or recalculated from 1 April to 31 July 2020:

Original age group of 18-29 who were not eligible for the ETI because they were employed before 1 October 2013:

• Employment start date of 1 October 2013 no longer applicable.
• The ETI value must be grossed down if there are fewer than 160 employed and remunerated hours.

Original age group of 18-29 who were not eligible for the ETI because they had already qualified for 24 months:

• Employment start date of 1 October 2013 no longer applicable.
• The ETI value must be grossed down if there are fewer than 160 employed and remunerated hours.

Added age group of 30-65 who were not eligible for the ETI due to their age and/or were employed before 1 October 2013.

• Employment start date of 1 October 2013 no longer applicable.
• The ETI value must be grossed down if there are fewer than 160 employed and remunerated hours.

To be applied from 1 May to 31 July 2020:

Employers not subjected to a wage regulating measure and exempted from the National Minimum Wage Act are not eligible to benefit from the employment tax incentive where the remuneration paid is less than R2,000 pm.

Donations to the Solidarity Fund, effective 1 April 2020

The tax-deductible limit for donations to the Solidarity Fund has been increased to 20% of taxable income for the 2020/2021 tax year.

As a special relief measure, the current 5% tax limit in the calculation of monthly PAYE of the employee has been increased. An additional limit of up to a maximum of:

• 33.3% for three months, OR
• 16.66% for six months,

depending on an employee’s circumstances, will be available.

Once the selection of either 33.3% or 16.66% has been made, it may not be changed.

The employee will be able to receive the deduction in excess of the 5% much earlier than under normal circumstances and will therefore not have to wait until final assessment, provided the donation is made to the Solidarity Fund

It should be noted that a final determination must still be made upon assessment, as the employee may have other income, deductions or losses that impact the final taxable income before the deduction of donations

The third revised 2020 Draft Disaster Management Tax Relief Bill and 2020 Draft Disaster Management Tax Relief Administration Bill, as well as the Notice on Expanding Access to Living Annuity Funds, will be published by the end of May to take into account all public comments.

To view the second revised draft bills and explanatory memorandum, follow the link.

Contact our legislation team at info@crs.co.za if you require any additional information.
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