Taxpayers can apply too
RELIEF: DEFERMENTS AVAILABLE FOR THOSE WITH PRE-COVID-19 SARS’ DEBT
People will also be able to apply for the Covid-19 tax relief for pay-as-you-earn and provisional tax.
The bulk of the tax relief provided thus far has gone into providing cash flow support for tax-compliant businesses that have been negatively impacted by Covid-19.
However, under certain circumstances, taxpayers with pre-Covid-19 tax debts may also be granted access to Covid-19 tax relief, according to Beatrie Gouws, head of stakeholder management and strategic development at the South African Institute of Tax Professionals (Sait).
Taxpayers with outstanding tax debt can generally apply for a debt deferment arrangement with the South African Revenue Service (Sars) and a waiver of the penalties on new returns.
Once they have an approved debt agreement with Sars, the taxpayer will also be able to apply for the Covid-19 tax relief for pay-as-you-earn (PAYE) and provisional tax.
In terms of the relief, 35% of the employer’s total employee tax liability (PAYE) may be deferred as well as 35% of the provisional tax liability.
Six instalments
A Sars spokesperson says the taxpayer will pay 65% when the return is submitted and the balance (35%) for April, May, June, July and August will be deferred in six instalments.
If an employer defaults on the payment of the instalments, penalties and interest will be imposed for the month of the default.
Joon Chong, tax partner at Webber Wentzel, says if taxpayers do not need to defer the 35% of the monthly PAYE they can pay the tax in full.
“This is ideal as employers need not keep track of instalment payments due on the PAYE statement of account and risk incurring penalties and interest due to late payments.”
Provisional tax deferrals
In terms of the provisional tax deferrals, “qualifying taxpayers” with a gross income less than
R100 million will be able to defer their first and second provisional tax payments.
They will be able to pay 15% instead of 50% of the estimated tax liability for the first payment and then 50% as the second payment.
Chong explains that 100% of the estimated tax liability will have to be paid by the third provisional payment to avoid interest.
“It appears that turnaround times for responding to applications for additional relief (large businesses or qualifying taxpayers needing more relief) are not set yet and there is no set number of days by which Sars has to respond,” notes Chong.
She advises taxpayers to follow up with their relationship manager or the Sars call centre to find out who the application has been allocated to, and then check regularly with that Sars official for a response.
Baker McKenzie tax experts Virusha Subban and Denny da Silva say the aim of the arrangement is to alleviate the cash flow burden of tax-compliant businesses during the economic crisis caused by the pandemic.
The instalment payment option applies to both small and larger businesses, as well as multinationals, they say.
“Taxpayers making use of this relief scheme must be able to prove substantial and material financial hardships as a result of Covid-19.
“Penalties will only be remitted if taxpayers are able to successfully prove the serious impact of Covid-19 on their business.”