South Africa went into a National Lockdown (“the Lockdown”) on the 26th of March 2020 due to the COVID-19 Pandemic that has struck our world. The Lockdown effectively meant that most businesses had to completely shut down during the various levels of the Lockdown
In an attempt to help our economy and struggling businesses affected by the COVID-19, the Government released a number of incentive and relief mechanisms during the various phases of the Lockdown.
On 21 April 2020, the President announced additional measures to assist employers to provide financial stability to their employees. One of these measures included a 35% deferral on the monthly PAYE liability owed to SARS for five months from 1 April to 31 August 2020. In addition, SARS will not impose any penalty or interest on the deferred PAYE liability amount. This meant that employers were still liable to pay the remaining 65% PAYE as per normal.
The employer must make repayment of the deferred tax in six equal instalments, together with the monthly payroll tax liabilities, starting in October 2020 (payable by 7 October 2020) and every subsequent month until March 2021 (payable by 5 March 2021).
SARS has determined the six equal instalments in respect of the total deferred employees' tax and has included the amounts since 15 September 2020 in the monthly Statement of Account (EMPSA)
The instalments are payable on the following dates:
7 October 2020.
6 November 2020.
7 December 2020.
7 January 2021.
5 February 2021; and
5 March 2021.
Penalty and interest will be imposed on any default (short payment or no payment) of any instalment
Employers and representative employers must not include and process the repayments with the payment of the monthly payroll tax liabilities. Therefore, affected employers can unfortunately not include the COVID-19 PAYE.
Deferred Relief payment due on 7 October 2020 in their September 2020 EMP201 declaration payments via eFiling.
Employers and representative employers are advised to make a separate payment concerning each instalment against the unique 19-digit payment reference number (PRN) reflected in respect of each instalment on the employer’s EMPSA to allocate the payment of each instalment to the correct period. As such, employers are required to pay the PAYE Deferred Relief payment separately via eFiling by using the PRN next to “COVID-19 INSTALMENT” for October 2020 on the EMPSA which is available on the eFiling profile.
Alternatively, employers may use the EFT payment option by using the “SARSPAYE” beneficiary option under the SARS public beneficiary listed on the banking platforms and using the PRN on the EMPSA or the EMP201 declaration for September 2020.
Even though employers received this deferment of their PAYE liability, it is very likely that they still have not recovered from the effects that the Lockdown had on them financially. This will most likely result in employers not being able to repay the balance of their PAYE liability as described above. It is therefore very important to know the options available to employers to prevent further collection steps from SARS.
Gerhard Linde, Master Tax Practitioner