Legislation: Covid-19 tax relief measures explained

National Treasury has issued explanatory notes on tax measures announced last weekend by Finance Minister Tito Mboweni in support of enterprises affected by the Covid-19 national state of disaster and lockdown, reports Pam Saxby for Legalbrief Policy Watch. This is noting that, according to an accompanying media statement, ‘there is a critical need for government interventions to assist with job retention and assist businesses that may be experiencing significant distress’. As Legalbrief Today has already reported, the new measures form part of ‘the fiscal package outlined by President Cyril Ramaphosa on 23 March … in his speech on the escalation of measures to combat Covid-19’ (Fin24) and will take effect tomorrow.

By introducing a tax subsidy for private sector employers ‘of up to R500 per month for the next four months’ for each employee ‘earning below R6,500 under the employment tax incentive’, the new measures will expand related age eligibility criteria and the amount ‘claimable’. According to the statement, the South African Revenue Service (SARS) will ‘accelerate the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible’. In addition, tax-compliant businesses with an annual turnover of R50m or less ‘will be allowed to delay 20% of their employees’ tax liabilities over the next four months and a portion of their provisional corporate income tax payments, without penalties or interest over the next six months’.

In anticipation of giving legal effect to these measures by tabling two Bills once Parliament reconvenes ‘later this year’, a draft Disaster Management Tax Relief Bill and draft Disaster Management Tax Relief Administration Bill will be released this week for public comment. Input received will inform a process in which the SARS and Treasury will consider ‘additional exceptional adjustments to assist with Covid-19 relief efforts and to the tax treatment of newly formed funds in this regard’.