Deferment of provisional and interim tax payments

As with the 2020 Draft Disaster Management Tax Relief Bill, the Draft Disaster Management Tax Relief Administration Bill was published on April 1 for comment by April 15. Again, even though this is a bill and must still be promulgated, the proposals came into operation on April 1.

Read: Decoding the Draft Disaster Management Tax Relief Bill

Both bills contain the latest proposed amendments in regard to tax relief measures to soften the economic dampener caused by the Covid-19 pandemic.

The amendments in this bill are also narrow, allowing deferments of provisional and interim tax payments for qualifying taxpayers that were registered with the South African Revenue Service (Sars) as at March 1.

A qualifying taxpayer includes a tax-compliant company, trust, partnership or individual with turnover or gross income of R50 million or less in the year of assessment falling within April 1, 2020 to April 1, 2021 period – and where the gross income amount does not include more than 10% of income in the form of interest, dividends, foreign dividends, property rental, or remuneration received from an employer.

Deferral of employee tax

Qualifying employers, either resident employer or representative employer, may pay just 80% of the employee tax (PAYE) due during this period. The remaining 20% must be included in the gross amount due by the employer in six equal monthly instalments, starting on September 7, 2020 and ending on February 5, 2021.

This deferral will not attract interest or penalties.

Deferral of provisional tax payments

In terms of the permissible deferment, these may now be paid as follows:

• If the first payment (for the first six months of the tax year) falls due between April 1 and September 30 this year, 15% of the total estimated tax for the full year may be paid instead of the usual 50%.
• If the second payment falls between April 1, 2020, and March 31, 2021, 65% of the estimated tax liability for the full tax year is payable (less the first provisional tax payment).

The deferred amount (the remaining 35% for the full year) must be paid at the time the third or ‘additional’ provisional tax payment is made.

Deferral of micro business interim tax payments

A micro business can be a company, a close corporation or an individual with a turnover of less than R1 million. A qualifying micro business may pay the tax due as follows:

• If the amount of tax payable for the first six months of the tax year falls between April 1 and September 30 this year, 15% is payable instead of the 50% of the estimated tax payable.
• If the amount of tax payable for the tax year falls between April 1, 2020 and February 28, 2021, the amount payable is 65% of the estimated tax liability for the tax year, less the first amount of tax paid.
• The interim payments deferred above will be due and payable by the micro business by the date of payment as specified in a notice of assessment.

This deferral will not attract interest nor penalties.

However, interest and penalties will apply in instances where, on assessment, SARS is of the opinion that a taxpayer did not qualify for relief under the proposed amendments.

Please note that this article provides a brief summary of the proposed legislative amendments and does not constitute tax advice.