HGG Financial Group wants to assure all our clients that we are here to help you during this difficult time. Please contact us for assistance in the preparation of the supporting documentation you may require, and to ensure that your business complies with the relevant regulations.

HGG Financial Group is presenting a series of information sessions over the next few weeks regarding the impact of COVID-19 on businesses.

Tax relief and funding available to SMMEs affected by COVID-19

On 23 March 2020 President Cyril Ramaphosa announced that the South African government would be providing assistance to small businesses and individuals adversely affected by the COVID-19 pandemic. Details of these measures were published by the Minister of Finance on 29 March 2020.

These measures fall into three main categories

  • Tax relief measures
  • Government-related funding to affected businesses
  • Claims from the Unemployment Insurance Fund (UIF)

For details on each of the above measures and the required documentation, please see the table below:

TAX RELIEF

For a detailed explanation of the COVID-19 tax relief measures, please click here. Please note that the allowed amounts have since increased. The new amounts are contained in the summary below.

In summary,

  • Tax relief of R500 per month is available to employees earning less or equal to R6 500 per month. Increases to R750.
  • SARS will pay ETI reimbursements monthly instead of only twice a year.
  • SMMEs will be allowed to delay 20% of their PAYE liabilities without penalties or interest for the next six months. Increases to 35%.
  • SMMEs will be allowed to pay only 15% of their provisional Corporate Income Tax (CIT) payments for the next 6 months without any penalties.
  • A temporary reduction in employee and employer contributions to the UIF and SDL is being explored.
  • Accelerated VAT repayments.
  • Postponement of the first carbon tax return to 31 October 2020
  • Postponement of excise and tax on certain beverage and tobacco products for three months
  • Increase in the tax deduction for donations made to the Solidarity Fund
  • An adjustment in the percentage withdrawal from a life annuity fund (2.5% - 17.5% adjusted to 0.5% and 20%)

Contact HGG Professional Accountants for assistance.

FUNDING AVAILABLE TO AFFECTED BUSINESSES

  • The Debt Relief Fund will provide funding to SMMEs who have been negatively affected by the COVID-19 pandemic. There are various requirements for those wishing to apply for funding and supporting documentation must be provided with your application. For a detailed explanation of the funding available to SMMEs, please click here:

To determine whether your business qualifies for this funding, please click here.

  • The Business Growth/Resilience Facility aims to enable SMMEs to actively participate in supply chains, especially those who manufacture products that are in demand due to the COVID-19 pandemic.
  • The Solidarity Response Fund aims to assist all those whose lives have been disrupted by the pandemic. See solidarityfund.co.za
  • The Department of Tourism has made R200 million available to SMEs in the tourism and hospitality sector who are under financial stress due to the travel restrictions relating to COVID-19.

Contact HGG Financial Group for assistance with the documentation required for these applications.

CLAIMS FROM THE UNEMPLOYMENT INSURANCE FUND (UIF)

  • In the case of the short-term shutdown of a company (21 days or more), an employee may claim from the UIF for loss of income.
  • Employees who lose income due to having to self-quarantine themselves for 14 days or more may also claim from the UIF.

Contact HGG Professional Accountants for assistance.

RELIEF MEASURES INTRODUCED BY BANKS AND INSURERS
South Africa's major banks have all announced relief measures available to their clients as a result of COVID-19. For specific information relating to your bank, please click on the links below:

South Africa's major insurers have also announced various measures to safeguard their clients. We are in constant contact with the various insurers with whom we work. Click on the links below for detailed information on how your insurer is providing relief to clients during this time:

For information on life insurance and medical cover initiatives, please contact your wealth manager:

For information on short-term insurance initiatives, please contact HiB

Further advice

  • For assistance with trusts and estate administration, please contact Linda van Greuning. 
  • For help with business plans, valuations and B-BBEE queries, please contact Casper Marais

 

EMPLOYMENT TAX INCENTIVE RELIEF

PROGRAMME PERIOD QUALIFYING RELIEF
Employment Tax Incentive (ETI) programme

4 Months

1 Apr to 31 July

Employees earning less or equal to R6 500

Increasing maximum ETI amount.

From R1 000 to R1 500 in first qualifying 12 months.

From R500 to R1 000 in second 12 months.

Monthly ETI claim in the amount of R750 during the four months period for employees from ages:

18 to 29 who are no longer eligible for the ETI as the employer

30 to 65 who are not eligible for the ETI due to their age.

       
Deferral of the payment of employees tax liability for small to medium sized businesses 4 Months from 1 Apr to 31 July

Small and medium size businesses with an annual turnover not exceeding R100 million.

Tax directive for good standing essential.

Deferral payment of 35% of their PAYE liability.

SARS not imposing administrative penalties and interest on late payments
The deferred PAYE liability must be paid to SARS in equal instalments over the six months period starting 1 August 2020.

       
Deferral of the payment of provision tax liability
for small to medium sized businesses

12 Months starting

1 Apr 2020 to 31 March 2021

Small and medium size business with an annual turnover not exceeding R100 million.

Individual trading business with turnover not exceeding R5 million.
Not more than 10% of turnover is derived from interest, dividends, rental from property, foreign dividends and salary.

Tax directive for good standing essential.

 

First provisional payment 15% of tax liability.

Second provisional payment 65% of tax liability.

No penalties and interest on late payment of deferred tax liability .

       
Reduction of Unemployment Insurance Fund
(UIF) contribution
    Government is busy exploring the temporary reduction
Skills development levy holiday 4 months starting 1 May 1% levy holiday effective 1 May (Note the date is different to the date for the PAYE holiday)  

FINANCIAL RELIEF

PROGRAMME PERIOD QUALIFYING DOCUMENTS NEEDED PROCESS

Debt relief finance scheme

Relief for SMME's in terms of loans at a rate of Prime -5%

Certain loan limits. R500 000

 

Registered by CIPC from 28 Feb 2020.

Owned by 100% SA citizens.

Employees 70% South Africans.

Priority given to women, youth and people with disabilities.

Compliant with SARS and UIF.

Registered on the SMME database
https://smmesa.gov.za

Proof that corona-effect is negative on bussines.

6 months cash flow projection

3 months bank statements

Proof that the corona-effect is negative on business

Payroll relief

Detail of employees

Registered by UIF

Bank details of employees

Detail breakdown on application of funds including salaries, rent, ect

Annual Financial Statements and recent Management Accounts

Register on: https://smmesa.gov.za

Complete online application form

Upload required supporting documents

         

Business Growth / Resilience Facilities

Applicable to businesess responsible for the production and retail of essential items.

Applicable to businesses responsible for production and food, specifically in support of COVId-19

 

Registered by CIPC from 28 Feb 2020.

Owned by 100% SA citizens.

Employees 70% South Africans.

Priority given to women, youth and people with disabilities.

Compliant with SARS and UIF.

Registered on the SMME database
https://smmesa.gov.za

Proof that Corona-effect is negative on bussines.

Business profile

6 months cash flow projection

Relevant industry certification

Estimations for funding requested

Annual Financial Statements and recent Management Accounts

 

Register on: https://smmesa.gov.za

Complete online application form

Upload required supporting documents

UIF CLAIMS

PROGRAMME PERIOD DOCUMENTS NEEDED QUALIFYING PROCESS

National disaster option

Illness benefit

Self quarantined for 14 days

21 days or more than 21 days in special circumstances

Confirmation letter from the employer and employee - agree 21 days temporary dismissal

Letter replace the medical certificate

More than 21 days, medical certificate is necessary

R3 500 per worker. Not flat rate. Based on amounts earned vs paid.

UI2.2 (medical portion ignored)

UI19 AND UI2.7 (to be completed by employer)

UI2.8 (banking details completed by the bank

Copy of ID document

Employer confirmation

Reduced time option Duration of 3 months Confirmation letter from the employer and agree on decrease of time Decreased time can be claimed from UIF (normally 66%) Subject to limits.

UI2.2 (medical portion ignored)

UI19 AND UI2.7 (to be completed by employer)

UI2.8 (banking details completed by the bank

Copy of ID document

Employer confirmation

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