On Monday, 23 March 2020, President Cyril Ramaphosa announced that a nationwide lockdown would be implemented from midnight on Thursday, 26 March 2020 to Thursday, 16 April 2020. This was implemented to flatten the curve and limit the spread of the Coronavirus (COVID-19).
Lockdown presents many South Africans with several challenges. At CMV, we have been doing our best to ease some of the pressure that our clients are facing. One of the ways in which we are achieving this is by supporting our clients with relief measures put in place by the South African government.
We highlight a few of these relief measures, as well as how we can assist, in the article that follows. We also endeavour to keep you up to date with any changes as they happen.
Relief Measure 1: Register on smmesa.gov.za
The Department of Small Business Development has made funds available to small businesses (with a turnover of less than R50 million per annum) who meet the following criteria:
- 100% owned by South African citizens
- Employ at least 70% South African nationals
- Registered with the South African Revenue Service and tax-compliant
Qualifying small businesses can apply to the relief fund but will be required to show the impact that COVID-19 has had on business. CMV can assist you in registering your business with smmesa.gov.za.
Relief Measure 2: COVID-19 Temporary Employer-Employee Relief Scheme (COVID-19 TERS)
The COVID-19 Temporary Employer-Employee Relief Scheme (COVID-19 TERS) assists employers who were forced to shut down their business and cannot, therefore, afford to pay the full salaries of their employees. These employers can apply for funds to pay salaries for 3 months. There are, however, various requirements that you need to comply with to qualify for COVID-19 TERS. For more information, visit this link.
Relief Measure 3: SARS PAYE Deferral
SARS has granted tax-compliant small businesses a four-month payment deferral of 20% on their PAYE liability. However, this is merely a deferral of PAYE payments between 1 April 2020 and 31 July 2020. The deferred PAYE liability must be paid to SARS in equal instalments over six months from August 2020 (your first payment will need to be paid by 7 September).
Relief Measure 4: SARS Provisional Tax Deferral
SARS has granted tax-compliant small businesses a 12-month proportionate payment deferral on provisional tax. This deferral commences on 1 April 2020 to 31 March 2021. The first provisional tax payment is due from 1 April 2020 to 30 September 2020 and will be based on 15% of the estimated total tax liability. The second provisional tax payment from 1 April 2020 to 31 March 2021 will be based on 65% of the estimated total tax liability. Provisional taxpayers with deferred payments will be required to pay the full tax liability when making the third provisional tax payment to avoid interest charges.
Relief Measure 5: Employee Illness Compensation
Should any of your employees contract the dreaded COVID-19 virus whilst at work, their medical expenses can be claimed from the Compensation for Occupational Injury and Disease. For more info, visit this link.
Relief Measure 6: Employment Tax Incentive (ETI)
The Employment Tax Incentive (ETI) programme was introduced in January 2014 to promote employment, particularly of young workers. To minimise the loss of jobs during this critical period, the government proposed the expansion of the ETI programme for four months (1 April 2020 to 31 July 2020). The programme works as follows:
- Increasing the maximum amount of ETI claimable during these four months from R1 000 to R1 500 in the first qualifying twelve months, and from R500 to R1 000 in the second twelve qualifying months. This only applies to employees eligible under the current ETI Act
- Allowing a monthly ETI claim, in the amount of R500, during these four months for employees from the ages of:
- 18 to 29 who are no longer eligible for the ETI as the employer has claimed ETI in respect of those employees for 24 months; and
- 30 to 65 who are not eligible for the ETI due to their age.
Relief Measure 7: COVID-19 SME Fund
- Administered by Business Partners (Rupert Foundation & Remgro)
- For working capital (salaries, rent, HPs, loan instalments)
- Fund Size R900 mil (R100 mil for Sole Prop & Partnerships administered by PWC)
- Transaction Value Loans between R250 000 – R1 000 000
- Cost of finance
- M1 M12 0%, payment holiday for first 12 months, no early payment implications
- M12 M60 Prime interest, no early payment implications
- Monthly disbursements
- Qualifying Criteria
- Feb 2019 AFS signed (non-negotiable)
- Fully compliant entity
- Formal registered entity
- Ownership does not have to be SA Citizens
- Excludes: Direct agriculture, non-profit organisations, Underground mining, On Lending
Essential Service Business Certificate
Only businesses that provide essential services during the lockdown period will be allowed to trade, but these businesses need to apply for a certificate permitting them to trade.
CMV will gladly assist with the submission of your Company / Close Corporation’s application to apply for an Essential Service Business Certificate.
Please feel free to send an e-mail to Karien Kemp should you need assistance with applying for an Essential Service Business Certificate.
CMV offices are closed from Friday, 27 March 2020 and will reopen on Friday, 17 April 2020, in compliance with the lockdown. Despite our office closure, we will still be fully operational as our team is working remotely and all queries will, therefore, be attended to.
Contact Us
Please contact your CMV accountant directly or send an email to info@cmv.co.za if you need assistance on any of the above-mentioned relief measures.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)