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APRIL 2020 – SOUTH AFRICA

COVID-19 ADDITIONAL TAX RELIEF MEASURES

It is important that employers note the following:

Additional measures announced

Following the President’s address to the nation on 21 April 2020, the Minister of Finance released a media statement on 23 April 2020 to provide more detail on the second set of measures that aim to assist individuals and businesses.

The following set of measures will help businesses stay afloat and pay their employees and suppliers.

  • Skills development levy holiday
    From 1 May 2020, there will be a four-month holiday for skills development levy contributions (1% of total salaries).
  • Increase in expanded employment tax incentive amount
    The first set of tax measures provided for a wage subsidy of up to R500 per month for each employee earning less than R6 500 per month. This amount will be increased to R750 per month.
  • Increase in the proportion of tax to be deferred
    The first set of tax measures allowed tax compliant businesses to defer 20% of their employees’ tax liabilities over the next four months (ending 31 July 2020). The proportion of employees’ tax that can be deferred will be increased to 35%.
  • Increase in the gross income threshold for automatic deferrals
    The first set of tax measures allowed compliant businesses a deferral of a portion of their provisional corporate income tax payments (without penalties or interest). The gross income threshold for both deferrals will be increased from R50 million to R100 million.
  • Increasing the deduction available for donations to the Solidarity Fund
    The tax-deductible limit (currently 10% of taxable income) for donations to the Solidarity Fund will be increased by an additional 10% during the 2020/21 tax year.
    Donations made through the employer can factor in donations of up to 5% of an employees’ monthly salary when calculating the monthly employees’ tax to be withheld. Depending on the employee’s circumstances, an additional percentage of up to 33.3% will be provided for a limited period for donations to the Solidarity Fund.
  • Expanding access to living annuity funds
    Individuals who receive funds from a living annuity will temporarily be allowed to immediately either increase (up to a maximum of 20% from 17.5%) or decrease (down to a minimum of 0.5% from 2.5%) the proportion they receive as annuity income, instead of waiting up to one year until their next contract anniversary date.

The above measures will be given legal effect in terms of changes to the Draft Disaster Management Tax Relief Bill and the Draft Disaster Management Tax Relief Administration Bill.

To view the media release, follow the link

 

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