The 2020 Draft Disaster Management Tax Relief Bill was published on April 1 for comment by April 15. Even though this is a bill and must still be promulgated, the proposals came into operation on April 1.
The bill contains the latest proposed amendments in regard to tax relief measures to soften the economic dampener caused by the Covid-19 pandemic.
The amendments are narrow, introducing small adjustments in two areas as detailed below.
Employment tax incentive
The employment tax incentive (ETI) may only be claimed by companies registered with the South African Revenue Service (Sars) as at March 1 and that have an annual turnover of less than R50 million.
First year of employment
Applicable only to those receiving remuneration equal to R6 000 per month or less, the incentive may be claimed for three categories of ‘qualifying employees’: those aged between 18 and 29; those employed in a fixed place of business located within a special economic zone (no age restriction); and those employed in an industry designated by the minister of finance (no age restriction).
Employment between 13 and 24 months
Applicable only to those receiving remuneration equal to R6 000 per month or less, the incentive that may be claimed is as follows:
After the first 24 months
A new subsection has been inserted, providing for qualifying employees who have already been employed for 24 months by the same employer and receive remuneration equal to R6 500 per month or less. The incentive is applicable to: employees aged 18 to 29; employees aged 30 to 65; employees employed in a fixed place of business located within a special economic zone; and those employed in an industry designated by the minister of finance.
The amendments apply to any remuneration paid on or before July 31, 2020.
Reimbursements may be claimed from Sars on a monthly basis, instead of every six months, “in the form and manner and at the time and place prescribed by the Commissioner for Sars”.
Covid-19 disaster relief trust
The second amendment allows for the registration of a Covid-19 public benefit trust for a limited four-month period (April 1 to July 31, 2020).
Please note that this article provides a brief summary of the proposed legislative amendments and does not constitute tax advice.
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