#6 – COVID 19: New Concessions
On 21 April, President Ramaphosa announced a number of extensions and additional concessions. The following may be relevant to non-profit organisations and social enterprises.
MONTHLY VAT REFUNDS
A number of non-profit organisations, particularly welfare organisations, are registered VAT vendors and claim VAT refunds from SARS. One of the relief measures announced is that returns can be lodged every month in order to that organisations can receive VAT refunds monthly rather than every second month. The cash flow benefit of an earlier VAT refund, should, however, be weighed against the additional administrative costs of preparing and submitting the claims. Please be in touch with CMDS or your accountants in this regard.
DEFERRAL OF PAYE PAYMENTS
In the President’s address to the nation he announced an increase from 20% to 35% of the amount of PAYE due that can be deferred for the months of April, May, June and July. He also announced extension to include entities with annual turnover up R100 million as well on application for those with over R100 million annual turnover.
The deferred amount must then be paid to SARS in equal instalments over the six month period starting for the month of August 2020, with the first payment to be made by 7 September 2020.
NOTE: This relief will not apply to employers that have failed to submit any returns (not only PAYE returns) or have tax debt in excess of R100 (unless an instalment agreement with SARS is in place). We urge to check that you are fully tax compliant before deferring any payments to SARS, otherwise you may end up with interest and penalties due. SARS recommends that you check your statement of account 48 hours after submitting the EMP201 to ensure SARS has not revoked the discount due to non-compliance. You can check tax compliance by reviewing a statement of account or compliance status on e-efiling, or contact the SARS call centre.
This relief amounts to an interest free loan from SARS and provides cash flow relief, particularly to those organisations who continue to pay their employees during the lockdown.
SKILLS DEVELOPMENT LEVY (SDL)
The President announced temporary relief from the payment of SDL for the months of May to August 2020. Many, but not all, nonprofit organisations that are also approved public benefit organisations, are exempt from the payment of SDL. However, for those that are not exempt, this is also a welcome relief. SDL does not need to be declared on the EMP201 returns for the affected months, and SARS has indicated that this will automatically occur.
EMPLOYMENT TAX INCENTIVE (ETI)
There are a number of organisations that have been participating in the ETI by employing youth between the ages of 18 and 29. The temporary expansion (only for 4 months), announced earlier, makes it possible for registered employers who currently pay employees less than R6500 per month to qualify to claim a PAYE credit (R750 per employee) under the ETI, even for employees who are older than 30 up to age 65 (provided they were employed after 1 October 2013).
NOTE: This ETI expansion only applies to employees who are registered with SARS as at 1 March 2020, and is not available if such employer has failed to submit any return to SARS or has debt in excess of R100 (unless an installment agreement with SARS is in place).