{"id":2616,"date":"2020-04-13T16:48:39","date_gmt":"2020-04-13T16:48:39","guid":{"rendered":"https:\/\/financiallyfitlife.co.za\/blog\/?p=2616"},"modified":"2020-04-13T17:03:49","modified_gmt":"2020-04-13T17:03:49","slug":"sars-relief-to-benefit-cash-flow","status":"publish","type":"post","link":"https:\/\/financiallyfitlife.co.za\/blog\/sars-relief-to-benefit-cash-flow\/","title":{"rendered":"SARS Relief to Benefit Cash Flow"},"content":{"rendered":"\n[et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;4.4.2&#8243;][et_pb_row _builder_version=&#8221;4.4.2&#8243;][et_pb_column _builder_version=&#8221;4.4.2&#8243; type=&#8221;4_4&#8243;][et_pb_text _builder_version=&#8221;4.4.2&#8243; hover_enabled=&#8221;0&#8243;]<p><span style=\"color: #000000;\">Concerns were rightfully raised about the various relief options been announced to help individuals and businesses been affected by the national lockdown enforced to stop the spread of the coronavirus. It became evident that most relief funding options are in the form of a loan repayable with interest; interest and fees are still charged on payment holidays; the criteria set to apply for relief funding is harsh; some insurers exclude covering the coronavirus impact on policies, application systems not working properly or application processes reaching capacity status and being closed early on. Subsequently many people are left stranded, not knowing where to turn to for assistance and also not knowing how they will be surviving the financial impact given the lockdown period been extended for another two weeks.<\/span><\/p>\n<p><span style=\"color: #000000;\">Amidst the negativity, uncertainty, stress and questions, SARS announced their relief measures. Eventually the dark cloud got a slight silver lining for some tax payers. The SARS relief options whereby a portion of PAYE and provisional payments will be deferred with no interest and penalties, will truly benefit taxpayers\u2019 cash flows. This is the kind of relief most people, being heavily affected by this crisis, were probably looking for and hoping to receive from all role players. \u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n<p><span style=\"color: #000000;\"><strong>What form of relief has SARS offered?<\/strong><\/span><\/p>\n<p><span style=\"color: #000000;\">The tax relief will <u>apply for tax periods from 1 April 2020<\/u> to the following tax types:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">Employees\u2019 Tax (PAYE) Deferral &#8211; 20% of an employer\u2019s total employees\u2019 tax liability can be deferred; and<\/span><\/li>\n<li><span style=\"color: #000000;\">Provisional Tax Deferral &#8211; 35% of a taxpayer\u2019s provisional tax liability can be deferred.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">Both PAYE and provisional tax payments will be deferred with <u>no interest or penalties<\/u> being charged i.e. a true benefit to assist with cash flow in a positive way over the short-term.<\/span><\/p>\n<p><span style=\"color: #000000;\"><strong>Who will qualify for the PAYE and Provisional Tax relief?<\/strong><\/span><\/p>\n<p><span style=\"color: #000000;\">Companies, partnerships, trusts and individuals who are tax compliant will qualify for the PAYE deferral. On the provisional tax side companies, trusts and individuals will qualify provided they are tax compliant.<\/span><\/p>\n<p><span style=\"color: #000000;\">Taxpayers whose <u>gross trade income don\u2019t exceed R50 million<\/u> for the year of assessment and the gross income <u>shouldn\u2019t include more than 10%<\/u> of income derived from interest, dividends, foreign dividends, rental from letting fixed property and any remuneration received from an employer will qualify. For PAYE relief the employer must have been registered as an employer with SARS prior to 1 March 2020.<\/span><\/p>\n<p><span style=\"color: #000000;\">Furthermore the taxpayer should be <u>fully tax compliant<\/u> to qualify for the deferral. Tax compliance will include the following:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000000;\">The taxpayer is registered for all tax types applicable to the taxpayer;<\/span><\/li>\n<li><span style=\"color: #000000;\">All returns across all tax types have been submitted; and<\/span><\/li>\n<li><span style=\"color: #000000;\">No outstanding payments due to SARS or payment arrangements have been made.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000000;\">More good news is that tax payers who are not currently fully tax compliant, will have the opportunity to rectify the situation and become tax compliant before the next PAYE \/ provisional tax return is due. Once the applicable return\/-s have been submitted and the taxpayer is still not fully tax compliant, the deferral will not be allowed.<\/span><\/p>\n<p><span style=\"color: #000000;\"><strong>The PAYE 20% deferral<\/strong><\/span><\/p>\n<p><span style=\"color: #000000;\">For each tax period running for the four months from 1 April 2020 to 31 July 2020, 20% of the total employee\u2019s tax liability will be deferred. The remaining 80% of the monthly tax liability for April to July will still be due as per the usual payment due dates (i.e. before 7<sup>th<\/sup> of the month). The total amount being deferred (i.e. cumulative 20% for 4 months) will be payable in 6 equal monthly payments from September 2020 to February 2021. The first payment of the deferred amount becomes due together with the August 2020 PAYE payment which is due on 7 September 2020.<\/span><\/p>\n<p><span style=\"color: #000000;\">Please note for the August payment which is due on 7 September there will be no deferral, thus 100% of the tax liability as well as the first payment of the deferred amount will be due and that will be the scenario for the following 5 months. Tax payers should plan accordingly.<\/span><\/p>\n<p><span style=\"color: #000000;\">Below is an illustration of the 20% PAYE liability being deferred between April and July (i.e. R80\u00a0000 in total); and then becomes payable in 6 equal payments from September 2020 in addition to the 100% monthly PAYE liability. \u00a0<\/span><\/p>\n<table width=\"0\">\n<tbody>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>Month<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\"><strong>Gross Payroll<br \/> Liability<\/strong><\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\"><strong>20% Deferral<\/strong><\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\"><strong>80% Payable<\/strong><\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\"><strong>Due Date<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>April 2020<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">20 000<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">80 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">7 May 20<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>May<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">20 000<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">80 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">5 June<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>June<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">20 000<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">80 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">7 July<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>July<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">20 000<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">80 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">7 August<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>Total amount deferred<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">\u00a0<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\"><strong>80 000<\/strong><\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">\u00a0<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">\u00a0<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><\/td>\n<td width=\"69\"><\/td>\n<td width=\"175\"><\/td>\n<td width=\"87\"><\/td>\n<td width=\"100\"><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>Month<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\"><strong>Gross Payroll<br \/> Liability<\/strong><\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\"><strong>20% Deferral Due<br \/> (R80 000 over 6 months)<\/strong><\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\"><strong>100% Payable<\/strong><\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\"><strong>Due Date<\/strong><\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>August<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">13 333<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">7 September<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>September<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">13 333<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">5 October<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>October<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">13 333<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">6 November<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>November<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">13 333<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">7 December<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>December<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">13 333<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">7 January 21<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>January 2021<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\">13 335<\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">100 000<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">7 February 21<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>Total deferral paid<\/strong><\/span><\/td>\n<td width=\"69\"><span style=\"color: #000000;\">\u00a0<\/span><\/td>\n<td width=\"175\"><span style=\"color: #000000;\"><strong>80 000<\/strong><\/span><\/td>\n<td width=\"87\"><span style=\"color: #000000;\">\u00a0<\/span><\/td>\n<td width=\"100\"><span style=\"color: #000000;\">\u00a0<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"color: #000000;\">\u00a0<\/span><\/p>\n<p><span style=\"color: #000000;\"><strong>The Provisional Tax 35% deferral<\/strong><\/span><\/p>\n<p><span style=\"color: #000000;\">Provisional tax payers whose 1<sup>st<\/sup> provisional payment is due between 1 April 2020 and 30 September 2020 should pay 15% (i.e. 50% less 35% = 15%) of their total estimated tax liability and 35% will be deferred. Where the 2<sup>nd<\/sup> provisional payment is due between 1 April 2020 and 31 March 2021, 65% (i.e. 100% less 35% = 65%) should be paid, taking into account the 1<sup>st<\/sup> payment already paid, and 35% will thus be deferred. The 35% that will be deferred will become due when the 3<sup>rd<\/sup> provisional tax payment is due.<\/span><\/p>\n<p><span style=\"color: #000000;\">Below is an illustration of the 35% provisional tax deferred payment that will be due on the 3<sup>rd<\/sup> provisional tax payment due date.<\/span><\/p>\n<table width=\"0\">\n<tbody>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>Estimated Taxable Income<\/strong><\/span><\/td>\n<td width=\"91\"><span style=\"color: #000000;\">10 000 000<\/span><\/td>\n<td width=\"180\"><span style=\"color: #000000;\">\u00a0<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>Company tax @ 28%<\/strong><\/span><\/td>\n<td width=\"91\"><span style=\"color: #000000;\">2 800 000<\/span><\/td>\n<td width=\"180\"><span style=\"color: #000000;\">\u00a0<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>1st Provisional Payment<\/strong><\/span><\/td>\n<td width=\"91\"><span style=\"color: #000000;\">420 000<\/span><\/td>\n<td width=\"180\"><span style=\"color: #000000;\">2 800 000 x 15%<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>2nd Provisional Payment<\/strong><\/span><\/td>\n<td width=\"91\"><span style=\"color: #000000;\">1 400 000<\/span><\/td>\n<td width=\"180\"><span style=\"color: #000000;\">2 800 000 x 65% less 420 000<\/span><\/td>\n<\/tr>\n<tr>\n<td width=\"155\"><span style=\"color: #000000;\"><strong>3rd Provisional Payment<\/strong><\/span><\/td>\n<td width=\"91\"><span style=\"color: #000000;\">980 000<\/span><\/td>\n<td width=\"180\"><span style=\"color: #000000;\">2 800 000 x 35% deferred<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"color: #000000;\">Source of information: <a href=\"http:\/\/www.sars.gov.za\" style=\"color: #000000;\">www.sars.gov.za<\/a><\/span><\/p>\n<p><span style=\"color: #000000;\"><strong>Going forward<\/strong><\/span><\/p>\n<p><span style=\"color: #000000;\">SARS indicated that they are working on adjusting their systems to automatically allow for the deferrals. Tax payers should however check on the status prior to submitting the relevant returns and follow the SARS instructions \/ processes with regards to applying for the deferral if registration \/ applying is required at the time. Tax payers should also <span style=\"text-decoration: underline;\">keep an eye on all tax calculations during this period to identify any errors early on<\/span>.<\/span><\/p>\n<p><span style=\"color: #000000;\"><strong>Both the PAYE and provisional tax deferrals will thus benefit qualifying tax payers\u2019 cash flow during this difficult time.<\/strong> It is <span style=\"text-decoration: underline;\">advisable for tax payers to put money aside during this period to have funds available when the deferred amount becomes payable to avoid cash flow shortages at that stage<\/span>. Hats off to SARS for offering real relief with a positive impact on tax payers\u2019 cash flows over the short-term.<\/span><\/p>\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]\n","protected":false},"excerpt":{"rendered":"<p>Concerns were rightfully raised about the various relief options been announced to help individuals and businesses been affected by the national lockdown enforced to stop the spread of the coronavirus. Amidst the negativity, uncertainty, stress and questions, SARS announced their relief measures. Eventually the dark cloud got a slight silver lining for some tax payers. The SARS relief options whereby a portion of PAYE and provisional payments will be deferred with no interest and penalties, will truly benefit taxpayers\u2019 cash flows. This is the kind of relief most people, being heavily affected by this crisis, were probably looking for and hoping to receive from all role players.     <\/p>\n","protected":false},"author":3,"featured_media":2617,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":""},"categories":[178,183],"tags":[29,99,187,65],"_links":{"self":[{"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/posts\/2616"}],"collection":[{"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/comments?post=2616"}],"version-history":[{"count":4,"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/posts\/2616\/revisions"}],"predecessor-version":[{"id":2624,"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/posts\/2616\/revisions\/2624"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/media\/2617"}],"wp:attachment":[{"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/media?parent=2616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/categories?post=2616"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financiallyfitlife.co.za\/blog\/wp-json\/wp\/v2\/tags?post=2616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}