Covid-19 Tax Relief

My heart breaks for every small business owner right now. I know first hand how hard we all work to get a business off the ground and to watch as business slows down or comes to a complete stop is just gut wrenching.

If you are in need of some immediate cash flow relief, I’d like to explain the tax relief options that has been put in place relating to PAYE and provisional taxes.

I have to warn you before I go into the details though, that I would go to great lengths to cut other operational needs before cutting away at the tax I owe right now. Negotiate with your landlord if you’re renting, ask essential services for some relief in exchange for less work that is deemed to be the case with quiet months ahead of us. Ask your bank for a payment holiday on your home loan. Look at the monthly subscriptions you pay, can you put some of them on hold? I know that Planoly for instance gives a two month payment break if you are in the process of cancelling your account, these monthly subscriptions add up so incredibly quickly. Sit with a bank statement, see what you pay and cancel anything that is not essential right now.

If you are then still in need of cash relief, dive into what is available to you here. Keep in mind there will be no getting out of paying the amounts when the repayments become due. None. If it were me, I’d rather take the knock now and keep my expenses cash in nature, and not sit with a heap of debt in front of me when business does resume as normal as it can be after all of this is over.

For all of the relief on offer, your tax status must be compliant, meaning there can be no outstanding returns or debts due to SARS.

PAYE

You may choose to only pay 80% of your monthly PAYE taxes for April through July 2020’s payroll without any penalties or interest. The remaining 20% will be due in equal instalments over 6 months from August’s payroll declaration which is due in the first week of September 2020.

This applies to the PAYE taxes on your April payroll, which is due in May 2020. There is no relief for your PAYE taxes from your March 2020 payroll which is due in April 2020.

Important to note it only applies to the PAYE portion of the payroll taxes you pay monthly, not on the UIF or SDL portions.

Provisional Tax

Provisional tax is due on your estimated profits 6 months after year end and then again at year end. Then there is a third provisional tax payment option for any top up amount due to SARS another 6 months after year end.

For most small businesses year end is February, meaning the first provisional tax payment is coming up on March 2020 - August 2020 estimated profits.

The second provisional tax payment would be due by February 2021.

The top up payment is due 6 months after year end, and if your year end is February, it’s due by September 2021.

The relief on offer:

Usually by the second provisional payment, you need to submit provisional tax due that is at least 80-90% accurate figures that you later submit on an income tax return.

The relief they have announced states that only 15% of your estimated tax liability for the year is due with your first provisional tax return. Then with the second return 65% of your tax liability for the year is due. And with your third provisional tax return the remaining 35% is due.

The relief is available to first provisional tax submissions due from April - October 2020.

If you have any specific questions, please be in contact and I’ll get back to you as soon as possible.

If you are in need of getting bulk accounting and tax work up to date, I’m offering a 30% discount to clients who are applying for funding and need to get tax compliant because of that, depending on availability.

All the best to you, your business and family in this time.