Covid-19 Pandemic: Tax Relief Measures

National Treasury has released a statement dealing with the tax measures that Government is implementing to assist businesses and households navigate this difficult time. Government has further stated that it recognises that the lockdown measures to contain the spread of the Covid-19 virus are having a significant impact on the South African economy. Most households and businesses have suffered significant losses in their income since a National State of Disaster was declared on 15 March 2020. This article seeks to summarise the tax measures put in place to assist in recovering from these losses.

On 29 March 2020, the Minister of Finance announced the details of an initial set of measures to assist businesses with their cash flow and provide an incentive for them to keep their lower-income employees in jobs. However, the conditions for businesses out there have worsened, causing National Treasury and SARS to recognise that the short-term interventions announced in the first fiscal package do not go far enough in assisting businesses or households through the crisis – especially as the lockdown has since been extended.

The Minister of Finance has now provided detail on the second set of measures that aim to assist individuals and businesses through the pandemic. The measures are expected to provide around R70 billion in support, either through reductions in taxes otherwise payable or through deferrals of tax payments for tax compliant businesses. The measures are:

  • A four-month skills development levy “holiday”
  • Fast-tracking of VAT refunds
  • Three-month deferral for filing and first payment of carbon tax liabilities
  • A deferral for the payment of excise taxes on alcoholic beverages and tobacco products
  • Postponing the implementation of some Budget 2020 measures
  • An increase in the expanded employment tax incentive amount
  • An increase in the proportion of tax to be deferred and in the gross income threshold for automatic tax deferrals
  • Case-by-case application to SARS for waiving of penalties

There are further tax measures aimed at assisting individual taxpayers and to provide financial backing from the fiscus to donate to the Solidarity Fund:

  • Increasing the deduction available for donations to the Solidarity Fund from 10% to 20%
  • Adjusting pay-as-you-earn for donations made through the employer
  • Expanding access to living annuity funds

For further detail on the above, click here to see the full media statement released by National Treasury.