As part of continued efforts to curb the financial strain that the COVID-19 pandemic has had on SME’s, the government has made provision for small to medium enterprises to defer employee PAYE without being penalized. Setting up payment arrangements without incurring penalties will hopefully help tax compliant businesses with cash flow during the pandemic. This tax deferral option applies to small, medium and large businesses. 

Senior tax advisor at Baker McKenzie, Denny da Silva notes that this is a deferment process and businesses obligation to SARS still stands. The tax due you’ll have to pay in instalments with the benefit of no penalties. 

Does your business qualify for tax deferrals? 

The regulations for applicants, according to White & Case, are:

  • Must be a tax compliant business as defined in section 151 of the Tax Administration Act that conducts a trade;
  • Be able to prove substantial hardships due to COVID-19;
  • have an annual turnover of R100,000,000 or less during the year of assessment ending on or after 1 April 2020 but before 1 April 2021;
  • have a gross income that does not include more than 20% income derived from interest, dividends, foreign dividends, royalties, rental from letting of fixed property, annuities and any remuneration received from an employer

How do you apply for your SME PAYE tax deferrals in lockdown?

According to SARS, you can send an email via a dedicated address with all the details. It will be treated on a case by case basis. 

Email: [email protected]

Read more about the SARS tax deferrals on the below links:

https://www.sars.gov.za/Media/Pages/Tax-Relief-measures.aspx#:~:text=How%20to%20apply%20for%20the,%40sars.gov.za.

https://businesstech.co.za/news/business/401481/sars-outlines-how-to-apply-for-a-tax-deferral-without-being-penalised/

https://www.gov.za/speeches/treasury-further-tax-measures-combat-coronavirus-covid-19-pandemic-23-apr-2020-0000

https://home.kpmg/xx/en/home/insights/2020/04/south-africa-tax-developments-in-response-to-covid-19.html