Covid-19 : desperate measures for desperate times : Covid tax relief

• Author: Michael Rudnicki
• DOI: 10.10520/EJC-1ea62a1ed2
• Published date: 01 June 2020
• Date: 01 June 2020
• Pages: 1-8

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© SIBER INK

Covid-19: Desperate Measures

For Desperate Times:

COVID TAX RELIEF

MICHAEL RUDNICKI

ABSTRACT

2020 is a year many of us would like to forget, but it is also a year that will be

imprinted on our minds for a long time. This article seeks to capture the key

tax and related benef‌its provided by government in order to contain, to some

extent, the economic bleed for many citizens.

The article starts with an approach to the implementation of appropriate

salary sacrif‌ice and salary reduction applications, and promotes the principle

of tax accrual, which is established by the unconditional right to enforce

payment. A reduction in salary must be addressed by way of the relinquish-

ment by an employee of the right to claim payment for services rendered in

advance of the services rendered. The implementation must be approached

in a manner whereby remuneration for tax purposes is reconciled with remu-

neration as a calculation base for related purposes, such as retirement fund

contributions.

The Temporary Employer/Employee Relief Scheme (‘TERS’) provided for

in terms of the UIF Act is brief‌ly summarised and considered in terms of draft

disaster-related tax legislation. The TERS benef‌it is not subject to employees’

tax and is exempt from tax in the hands of the employee.

Qualifying taxpayers, with turnover of R100m per annum or less, can avail

themselves of employees’ tax and provisional tax deferral relief.

For the period 1 April 2020 to 31 July 2020, employers must restrict their

employees’ tax payments to SARS to 65% of the employees’ tax liability. The

remaining 35% must be paid to SARS in six equal instalments commencing

7September 2020 and ending on 5February 2021.

Qualifying taxpayers need pay only 15% of their estimated tax liability

in respect of their f‌irst provisional tax payment due from 1 April 2020 to 30

September 2020. The second provisional tax payment due from 1 April 2020

to 31 March 2021 will be based on 65% of the estimated total tax liability.

The balance of the year’s tax payable will be payable when the third provi-

sional tax payment is due.

Introduction

The Covid-19 pandemic has hit the South African economy hard. No

warning was given. We seemed hopeful in January, at the start of a new

decade, notwithstanding the negative sentiment and credit rating agency

downgrades. The lockdown has resulted in many working citizens forced to

stay at home. Very few have been able f‌inancially to sustain their livelihood.