…Lockdown relief measures during the lockdown:
The nationwide lockdown has affected most businesses and fortunately, how you pay your taxes can be the least your worries with the latest measures implemented by the South African Revenue Services (SARS).
I thought it would be beneficial for more businesses to stay informed to avoid missing deadlines because taxes still need to be paid.
Here’s what you should know about the relief measures put in place by SARS during the lockdown:
SARS has advised taxpayers and tax practitioners to use the online channels such as eFiling, the SARS MobiApp and e@syFile to interact with SARS.
SARS has provided dedicated email addresses for this purpose on their website (www.sars.gov.za).
It has been stated that visits to SARS offices are possible, but an appointment must be made on the SARS website. Please remember the lockdown restrictions that are in place when you are travelling to a SARS branch
TAX RELIEF MEASURES:
There is no relief for the submission of tax returns. Taxpayers must therefore ensure that returns are submitted on or before the due dates. There are however other relief measures in place for the following affected groups:
An increase in the 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 that earns less than R6 500 per month. This amount will be increased to R750 per month at a total cost of around R15 billion. An increase in the proportion of tax to be deferred(postponed) and in the gross income threshold for automatic tax deferrals: The first set of tax measures also allowed tax compliant businesses to postpone the payment of 20 per cent of their employees’ tax liabilities over the next four months (ending 31 July 2020) and a portion of their provisional corporate income tax payments (without penalties or interest). The proportion of employees’ tax that can be postponed will be increased to 35 per cent and the gross income threshold for both deferrals will be increased from R50 million to R100 million, providing total cash flow relief of around R31 billion with an expected revenue loss of R5 billion.
Fast-tracking of value-added tax (VAT) refunds: Smaller VAT vendors that are in a net refund position will be temporarily permitted to file monthly instead of once every two months, thereby unlocking the input tax refund faster and immediately helping with cash-flow. SARS is said to be working towards having its systems in place to allow this in May 2020 for Category A vendors (vendors with taxable supplies not exceeding R 30 million in a 12 month period, or farmers with taxable supplies that exceed R 1.5 million in a 12 month period) that would otherwise only file in June 2020.
3. Provisional Tax:
The following measures are aimed at assisting small to medium sized businesses (individuals, companies, and trusts (including micro-businesses) to alleviate cash flow problems for compliant provisional taxpayers:
· Postponement of a portion of the payment of the first and second provisional tax liability to SARS, without SARS imposing penalties and interest for the late payment of the deferred amount;
· The first provisional tax payments due from 1 April 2020 to 30 September 2020 will be based on 15 percent of the estimated total tax liability, while the second provisional tax payments due from 1 April 2020 to 31 March 2021 will be based on 65 percent of the estimated total tax liability (after deducting the 15% payment amount received from the 1st period into account);
· Provisional taxpayers with postponed payments will be required to pay the remaining 35% tax liability when making the third provisional tax payment in order to avoid interest charges on assessment.
According to a notice from the Chairperson: Customs and Excise National Appeals, the days during the period 27 March 2020 to 16 April 2020 will not be taken into account in determining days or period for purposes of an appeal under the Customs Act.
SARS has not given a similar notice for objections and appeals under the other tax Acts. Where a taxpayer is unable to comply with a prescribed period during which steps in the dispute process must be instituted due to the lockdown, it would constitute exceptional circumstances.
5. Corporate Income Tax:
Postponing the implementation of some Budget 2020 measures: The 2020 Budget announced measures to broaden the corporate income tax base by:
(i) restricting net interest expense deductions to 30 per cent of earnings; and (ii) limiting the use of assessed losses carried forward to 80 per cent of taxable income. Both measures were to be effective for years of assessment commencing on or after 1 January 2021. These measures will be postponed to at least 1 January 2022.
6. Carbon Tax:
Three-month deferral for filing and first payment of carbon tax liabilities: The filing requirement and the first carbon tax payment are due by 31 July 2020. To provide additional time to complete the first return, as well as cash flow relief in the short term, and to allow for the utilisation of carbon offsets as administered by the Department of Mineral Resources and Energy, the filing and payment date will be delayed to 31 October 2020, providing cash flow relief of close to R2 billion.
Case-by-case application to SARS for waiving of penalties: Larger businesses (with gross income of more than R100 million) that can show they are incapable of making payment due to the COVID-19 disaster, may apply directly to SARS to defer tax payments without incurring penalties. Similarly, businesses with gross income of less than R100 million can apply for an additional deferral of payments without incurring penalties.
How to apply for the waiving of penalties for tax debt:
Larger businesses (with gross income of more than R100 million) that are incapable of making payment due to the COVID-19 disaster, may apply to defer tax payments without incurring penalties by emailing us on COVID19IPAaboveR100m@sars.gov.za.
Similarly, businesses with gross income of less than R100 million can apply for an additional postponement of payments without incurring penalties by emailing SARS on COVID19IPAbelowR100m@sars.gov.za.
If you need more advice, please drop me an email on firstname.lastname@example.org or comment below.